India links advanced manufacturing growth to MSME digital transition

Workforce readiness, AI adoption will determine how fast MSMEs shift to digitally driven production.

India’s ability to compete in advanced manufacturing will depend on how effectively its MSME clusters shift to digitally driven and service-integrated production models, senior policymakers and industry leaders said at the CII Smart Manufacturing Summit 2025 held on 15 December in New Delhi.

Debashree Mukherjee, Secretary at the Ministry of Skill Development and Entrepreneurship, said India’s strong IT capabilities provide a strategic advantage as manufacturing increasingly integrates digital technologies and advanced services. She added that workforce readiness will be central to enabling this transition.

Mukherjee highlighted the PM SETU scheme, which carries a ₹60,000-crore commitment over the next five years to build an industry-led skilling ecosystem through upgraded ITI clusters, centres of excellence, and an expanded apprenticeship framework.

“We are creating the skilled talent that industry needs. With hyperlocal district-level planning and AI-driven skill mapping, we aim to ensure that every enterprise can access the right people at the right time,” she said, adding that the next five years will be critical for India’s shift toward smart manufacturing.

Industry leaders at the summit said frontier technologies are already reshaping manufacturing processes. Dilip Sawhney, Chairman of the CII National Committee on Smart Manufacturing, said tools such as CAD/CAM, 3D printing, smart sensors, blockchain, and generative AI are transforming design, production, and quality across sectors.

Participants also stressed that Industry 4.0 adoption must extend beyond large enterprises. Ravi Raghavan, Co-Chairman of the CII National Committee on Capital Goods and Engineering, said mid-sized companies can achieve faster impact through incremental digital upgrades, provided skills development keeps pace.

The discussions also highlighted structural challenges, including limited domestic R&D intensity and uneven data readiness for AI deployment, particularly among MSMEs. Speakers said addressing these gaps will be essential if manufacturing is to play a larger role in India’s long-term growth strategy.