Approaching Industrial Automation as a Strategic Initiative

Too many automation programmes in Indian factories begin with the hardware and end with a pilot. Manufacturing leaders should flip the order.

Join a discussion on getting a new robot cell, or a  vision system or  adding an MES for a line, and it’s usually around the machine , what it can do, how fast it runs, which the peer use case vendor spoke about or which vendor makes the best one. 

We don’t usually find takers of what expectation of the end objective is and the often gets quieter, our argument is simple.Automation often wears a cost hat in most companies as its approved , owned and measured as an engineering project .It should however be part of executing a business strategy to improve a metric in the P &L.

The gap between saying and scaling

Look at what manufacturers say about digital and smart manufacturing, then at what they have actually scaled. The pattern repeats across years and countries :

The Indian gap is 55 percentage points between intent and scale. The Deloitte gap is 36 points between spending and measuring. In other words, more than a third of large manufacturers are putting serious money into smart manufacturing without a clear way to say what it returned.

The McKinsey survey also found something uncomfortable. More than 90% of respondents believed they were at the forefront of digital manufacturing in their industry, or on par with competitors. Coverage of the same research in IndustryWeek reported that 84% of companies had been stuck in pilot mode for more than a year, and 28% for more than two.

Most companies think they are among the early adopters but they arent , that mismatch is what happens when progress is counted in pilots rather than in rupees.

What gets measures gets done 

None of this means automation doesn’t pay. It does, when it is aimed at business outcomes. Deloitte’s respondents reported a net improvement of 10% to 20% in production output, 7% to 20% in employee productivity, and 10% to 15% in unlocked capacity since starting their smart manufacturing work.

At the far end, the World Economic Forum’s Global Lighthouse Network shows what a full transformation can do. The network now has 201 sites. The 12 newest sites recognised in September 2025 reported average gains of 40% in labour productivity, plus reductions of 48% in lead time, 41% in product defects and 28% in energy use.

Looking at what those numbers say and what it measures, Productivity, lead time, quality and energy are P&L and balance-sheet items. None of them is “number of robots installed” or “PLCs connected.”

What belongs in the business case

A plant manager while has to  justify a cell on cycle time but has to wear a finance department hat in asking wider set of questions,

Quality. cost of poor quality can reach 10% to 20% of a company’s revenue, so logically the automation case should put a figure on scrap, rework, warranty claims and returns, and make it clear the why the business needs it with clear benefits .

People and safety. Between 2017 and 2020, 3 workers died and eleven were injured every single day in Registered Indian factories according to DGFASLI, which claims have dropped by 40% since then but think about it every  incident shows up in lost production, compensation, legal exposure and morale. Removing people from the most hazardous tasks is top of the line business priority specially for sectors more exposed to such scenarios.

Labour reality. A 2026 discussion paper from the Centre for Social and Economic Progress looked at automation in India’s auto-component clusters. It found that smaller firms tend to automate reactively, in response to absenteeism and difficulty finding workers. Tier-1 suppliers automate for quality, traceability, safety, cycle time and export competitiveness. The paper also found that none of the firms it studied had cut jobs; workers were moved into inspection, maintenance and supervision. That is a planning question as much as an HR one ( again a Business level function). Which roles will people move into, and who will train them?

Timing. The International Federation of Robotics counted a record 9,120 industrial robot installations in India in 2024, up 7% on the previous year, which made India the world’s sixth-largest market. Automotive took 4,070 of those units. But the IFR also warns that installations may contract in 2026 once the Production Linked Incentive scheme ends. Automation decisions driven by a subsidy window are tactical by definition. But if justified by expected  business outcomes will be pursued.

How to make automation a strategic initiative

From the research, and from what tends to separate scaled programmes from stalled ones, five practices stand out for leadership teams.

First, put a P&L owner in charge. McKinsey’s analysis argues that transformation should be driven from the top and through the people who own the P&L, rather than treated as an IT or engineering project. Deloitte found that operations leaders own smart manufacturing at 51% of companies, and technology owners at 38%. Either can work, provided the owner is also answerable for a business outcome and not as a project manager responsible for only project completion.

Second, measure before you spend. What is the baseline?  Use fully loaded labour costs, overtime, training and turnover, not the wage alone. 

Third, build the roadmap before the pilot. A pilot should test a step in a plan, not its entirety. Decide early which data architecture, standards and partners you will scale on, so a successful trial has somewhere to go.

Fourth, treat capability as part of the investment. Fewer than half of the Deloitte respondents (48%) had a training and adoption standard in place. In India, CII rates the digital maturity of large enterprises at 3.4 on 5, medium-sized firms at 2.9 and MSMEs at 2.4. Think about it a plant at 2.4 will not get to 4 by buying equipment alone.

Fifth, set value targets and review them like any other investment. If a project can’t show its return against the baseline after a set period, stop it, fix it, or scale it. All three are better than letting it linger as a showcase.

Starting right is important

Indian manufacturing is investing. Industry 4.0 spending by Indian manufacturers is growing and expected to grow. It will continue if it is felt in margins.

That depends on a choice made early in every project, about whether the conversation starts with the controller or the expected outcome. Start with the PLC, and you may get a well-engineered solution that everyone thinks of as cost. Start with the  business outcome, and the technology choices tend to fit in naturally as a means to an end, because everyone in the room knows what they are trying to achieve.