E-Paper
Unlocking productivity key to India’s manufacturing ambitions
This article is authored by Naresh Kumar, chief operating officer, Lauritz Knudsen Electrical & Automation.
India’s manufacturing sector is key to its 2047 Viksit Bharat dream, but its factories need a technology-led transformation so they can deliver on their promise to drive the country’s emergence as a fully developed nation.
Manufacturing currently accounts for about 17% of India’s overall GDP. But the sector’s share needs to grow to a quarter of overall GDP, if the country is to achieve its aim of establishing itself as a fully developed $30 trillion economy by 2047.
Initiatives like Make in India and the rollout of policies like the National Manufacturing Mission and Production Linked Incentive (PLI) schemes have sped up the sector’s advance.
But there are still gaps we need to address to unlock India’s potential as a manufacturing power.
This can be achieved by two means – adding capacity and improving productivity.
India does need to boost factory capacity. Building more factories means it can produce more and thereby grow the manufacturing sector’s share of GDP.
Adding capacity, however, is only part of the solution. There is, after all, a limit to how many factories you can build, while manufacturing growth will inevitably plateau once maximum operating capacity is reached.
The real gains will be delivered by boosting productivity.
Which is exactly what our manufacturing sector needs, and the upcoming Union Budget represents a critical inflection point in this journey.
Productivity in Indian manufacturing should not be interpreted as a deficit, but as the sector’s largest untapped source of value creation. India industrialised later than most advanced economies, which means a significant share of its factory base is now approaching a natural modernisation inflection point. This creates a rare opportunity to leapfrog legacy manufacturing models and embed automation, digital intelligence, and clean energy directly into the design of new and existing facilities. The productivity journey ahead is, therefore, not about catching up with global peers, but about accelerating ahead by building factories that are smarter, more efficient, and future ready by design.
Similarly, India’s factories use more energy to produce per dollar of output than peers in industrialised nations.
India’s economy has typically tended to be more energy intensive than other industrialised global peers.
The country is the world’s fourth largest economy and accounts for a 3.4% share of global GDP. But it accounts for 7.3% of global energy consumption, underlining the energy-intensive nature of India’s economy.
With manufacturing accounting for over 40 percent of overall energy consumption, it stands to reason that India’s factories are also more energy intensive.
To be sure, the energy efficiency of India’s economy has shown an improvement, rising 1.9% between 2000 and 2023, according to an RBI study. The efficiency gains outpaced the global average of 1.4% and BRICS average of 1.62%. In fact, India only trailed developed countries like the US and Germany, which made efficiency gains of over 2% for the same period.
Still, the need to unlock even greater efficiencies is only going to assume greater importance as manufacturing growth drives up energy demand. India still largely relies on fossil fuels like coal to power its factories. Switching over to renewable, clean energy will therefore be pivotal to reducing the manufacturing sector’s energy intensity even as consumption goes up.
Unplanned downtime remains a persistent structural constraint for manufacturing productivity in India. Global manufacturing assessments by institutions such as McKinsey Global Institute and the World Economic Forum consistently show that factories operating with reactive or preventive maintenance models experience significantly higher production losses than those using predictive and condition-based systems.
In emerging manufacturing ecosystems, downtime is further amplified by ageing equipment, inconsistent power quality, and limited real time monitoring. These shutdowns impose substantial financial costs, disrupt supply commitments, and undermine reliability, which is increasingly as important as cost competitiveness in global manufacturing decisions.
Technology can enable solutions to all of these bottlenecks. Indeed, embracing it will make India’s factories safer, faster and smarter.
New-age technology like automation, the Internet of Things (IoT), clean energy architecture and predictive analytics systems have the potential to significantly boost the productivity of Indian factories.
AI-driven automation, for instance, can increase manufacturing productivity by up to 40% globally.
Automation enables faster production, greater precision and improved quality control, making the manufacturing process far more efficient. A factory with a high degree of automation, therefore, produces more, more reliably at a lower cost.
Predictive analytics, meanwhile, drastically reduce downtime by predicting the maintenance requirements of capital machinery.
Machinery lasts longer when maintained regularly, reducing the need for heavy capital investments as would be needed in case of replacements. Routine maintenance, meanwhile, is also cheaper than major repairs, reducing costs significantly for a business in the long run.
Renewable energy architecture can also pave the way to improved energy efficiency. Energy efficiency can unlock significant savings for a manufacturing business. Investing in making factories renewables-ready today can yields dividends in the future. This involves outfitting factories with low and medium voltage components, electrical systems, electrical, energy management, and solar energy solutions, electrical modernisation, and metering.
Addressed together, the closing of these gaps can transform Indian manufacturing’s productivity picture. Ultimately, that is what counts most.
Productivity must become the central design principle of the factory of the future. Yes, capacity expansion will drive scale, but technology-led productivity gains will determine competitiveness, resilience and sustainability.
Automation, predictive intelligence and clean energy are no longer optional upgrades. They are the levers that will decide whether India’s factories merely grow in number or genuinely rise to global leadership.
The next phase of India’s manufacturing journey will not be defined by how much we build, but by how intelligently, efficiently and responsibly we produce.
This article is authored by Naresh Kumar, chief operating officer, Lauritz Knudsen Electrical & Automation.
