The India Digital Transformation Market is on a promising growth trajectory, with an estimated value of USD 89.88 billion in 2024, projected to soar to USD 229.59 billion by 2029 according to Mordor Intelligence report. This remarkable expansion, anticipated at a compound annual growth rate (CAGR) of 20.63%, is driven by a confluence of factors: rising investments in digital infrastructure, advances in automation technology, and the proliferation of e-commerce.
Key Growth Drivers in India’s Digital Transformation Market
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Automation Technology and Warehousing Advancements
A significant driver of this growth is the adoption of automated warehousing technologies like dark stores and micro fulfilment centers. In February 2023, Prozo, a supply chain company, introduced the Mini-Load Automated Storage and Retrieval System (mini-load ASRS), positioning itself as India’s first 3PL company to incorporate such advanced automation, paving the way for 100% warehouse automation.
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Internet and Smartphone Penetration
The expansion of internet and smartphone usage remains a central force behind the market’s momentum. According to the India Brand Equity Foundation (IBEF), the number of smartphone users in India is projected to reach an impressive 887.4 million by 2030, underscoring the broadening base for digital services and e-commerce.
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Growth in Packaged Food Demand
With the shift toward convenience, the demand for packaged food products is rising, anticipated to push forward India’s digital retail segment. The Retailers Association of India projects that the market value of packaged food in India will increase from INR 4,240 billion in 2022 to INR 5,798 billion by 2025, offering vast potential for e-commerce and related digital services.
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Government Initiatives and FDI Policies
Government initiatives such as “Digital India” and favourable FDI policies have been pivotal in expanding digital commerce. Notably, the proposed National E-commerce Policy and 100% FDI allowance in e-commerce marketplace models aim to streamline data regulations, enhance online trade frameworks, and promote foreign investment in digital infrastructure.
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Industry Innovation in Digital Solutions
Companies are continuously launching innovative products to support India’s digital transformation. For example, ABB’s February 2023 release of the ABB Ability Symphony Plus distributed control system offers industries access to digital fleet management, mobile data access, and real-time alarm processing, allowing industries to optimize costs and improve responsiveness.
Industrial Robotics: The Largest Market Segment
India’s industrial robotics market is forecasted to hold the largest market share, comprising various robots, such as SCARA, articulated, and collaborative robots (cobots). These robots contribute significantly to industries requiring speed, precision, and reduced product damage, particularly in manufacturing and material handling sectors. Cobots, in particular, are growing in popularity due to their advanced sensors and ability to adapt to environmental changes, enhancing operational efficiency.
The Indian government has also been an advocate of robotics and automation through initiatives like “Make in India.” In November 2022, Addverb Technologies, backed by Reliance, announced plans for a new manufacturing facility in Greater Noida, producing industrial robots for tasks like automated storage and retrieval, further promoting automation in manufacturing.
Affordability and Accessibility
Cobots have become more affordable and user-friendly, widening the scope of automation across industries. Svaya Robotics, for instance, launched India’s first locally manufactured line of collaborative robots in February 2023, with high precision and repeatability, furthering adoption and reducing dependency on costly imports.
Manufacturing: The Fastest Growing Market Segment
Manufacturing contributes over 17% of India’s GDP, employing over 27 million people. Government incentives, tax cuts, and the “Make in India” initiative have positioned India as a potential global manufacturing hub. Increasing investment in process efficiency and cost reduction are accelerating automation in manufacturing.
The Ministry of Statistics and Programme Implementation noted a 5.7% year-over-year growth in India’s manufacturing production in May 2023, driven by technological advancements and the integration of force/torque sensors and other automation tools. According to the 8th “State of Smart Manufacturing Report” by Rockwell Automation, Indian manufacturers are leading globally in technology investments, dedicating 35% of their operating budgets to innovation.
E-Commerce Expansion and Warehousing Needs
India’s e-commerce market, projected by IBEF to grow from USD 38.5 billion in 2017 to USD 200 billion by 2026, is driving demand for automation in warehousing and logistics. This market growth demands highly automated warehouses capable of efficiently managing increasing package volumes, positioning India as a crucial hub for e-commerce and warehousing technology advancements.
Challenges in Automation Adoption
While digital transformation is accelerating, certain challenges persist. With India’s comparatively low labor costs, investment in industrial automation and the associated staff training presents hurdles, especially for small and medium enterprises (SMEs). The availability of affordable labor often deters businesses from adopting expensive automation systems, thus acting as a restraint on market growth.
Future Outlook
The digital transformation market in India is set for dynamic growth across manufacturing, e-commerce, and other key sectors, driven by rising technological adoption, favourable government policies, and the country’s massive consumer base. The adoption of industrial robotics and warehousing automation solutions will be particularly impactful, providing competitive advantages in productivity, efficiency, and cost.
The integration of artificial intelligence and robotics technology is expected to double in the coming 3-5 years, underscoring the need for businesses across industries to adapt. India’s digital transformation, supported by innovation and global investment, is well-positioned to continue its upward trajectory, transforming industries and shaping the future of one of the world’s fastest-growing economies.
