Why India’s Manufacturing Boom Will Create More Robots than Blue-Collar Jobs

In 2016, amid global calls to revive domestic manufacturing, I had argued that government pushes  - from Make in India to Make America Great Again - would not spark an employment-led industrial revolution, but rather catalyze automation-led manufacturing transformations. Nine years later, India’s own manufacturing trajectory confirms this prediction with surgical clarity.

Despite record-breaking capital inflows, thriving exports, and the China+1 strategy playing to India’s advantage, job creation in manufacturing has been lackluster. The gap between factory output and factory employment is no longer just a trend - it is now a defining feature of India’s industrial rise.

The False Promise of Mass Job Creation

At the core of India’s manufacturing push lies the Production-Linked Incentive (PLI) scheme, launched with grand ambitions of creating 6 million direct jobs and adding US$500 billion in output by FY27. Yet, by June 2024, only 584,000 direct jobs had materialized—just 36% of the target. Worse still, this limited job growth is concentrated in three sectors - mobile phones, food processing, and pharma - while capital-intensive industries like automotive, solar, and electronics trail behind in employment generation.

The contrast is stark. While output surges - particularly in electronics, where exports are expected to hit ₹3.25 trillion in FY25 - the number of hands on deck is barely growing. The Annual Survey of Industries confirms this: from FY16 to FY23, manufacturing employment grew at a tepid 1.8% CAGR.

The other side of the mirror: Labour's Lament

India’s vast pool of working-age citizens is frequently cited as a “demographic dividend.” But that dividend is turning elusive. Attrition in manufacturing roles remains alarmingly high—over 50% of temporary workers quit within a year, with 10% dropping out in just the first 90 days.

Why? As this article in the Mint states:

• Cultural mismatch: Rural migrants struggle with urban food habits, language barriers, and most importantly, regimented factory life.

• Welfare disincentives: Programs like MGNREGA and subsidized grains reduce the "reservation wage."

• Skill deficit: Only 17% of youth aged 15–29 have formal vocational training.

• Rising wage expectations: By 2010, India’s hourly labour costs (US$2.68) already outpaced China’s (US$2.51), undercutting the myth of India’s cheap-labour advantage.

Add to that, the urban infrastructure to support a steady industrial workforce - like dormitories, childcare, and commutes - remains substandard. The outcome? A broken pipeline between policy ambition and labour supply.

The Robot as a savior for manufacturers

As the human workforce falters, robots are stepping in. In 2023 alone, India installed 8,510 industrial robots - a 59% increase YoY - bringing the total operational stock to 44,958, and propelling India to 7th place globally.

This isn’t limited to mega factories. Consider:

• Foxconn India: Now uses 2 robotic arms per 10 iPhone assembly workers, up from 1 per 20 in 2016.

• Delta Electronics: Tripled its automated SMT lines in Krishnagiri, halving labour per unit.

• Tata Steel Kalinganagar: AI vision systems cut defects by 25%, saving ₹1.4 billion annually.

These aren’t just isolated examples - they’re signals of a systemic shift.

India's Leapfrog Moment: The Telecom Analogy

India’s current manufacturing evolution mirrors its telecom transformation from the 2000s. Back then, India leapfrogged from a few million landlines to 1.14 billion mobile users, bypassing copper entirely. Today, it’s bypassing labour-intensive assembly to achieve high-precision, high-output production via automation.

Parameter	Telecom (2000–2025)	Manufacturing (2016–2025)
Innovation	GSM → 4G/5G	Robots, AI, IoT
Outcome	Lowest data rates globally	59% YoY robot installation growth
Jobs	Shift to digital app economy	Shift to mechatronics & data roles
User impact	19.5 GB/month per user	15% CAGR in electronics exports

This “bypass effect” means prosperity is no longer chained to headcount. And that could be the most inclusive outcome of all - one where higher incomes and productivity replace the treadmill of low-skill, low-pay jobs.

India’s fertility rate has fallen below replacement level (2.0), with population growth slowing sharply post-2030. The working-age population is expected to plateau around 2035, and then decline. This fundamentally alters the employment equation: India won’t need more factory jobs—it will need better ones.

India doesn’t need more factory jobs—it will need better ones.

Automation offers exactly that. According to McKinsey, a 10% increase in robot density lifts productivity by 1.4%. Between FY21 and FY24, factory wages rose 51%, outpacing inflation. That’s real income growth - driven by fewer but more skilled workers, not more warm bodies.

From Policy to Perception

For India to fully realize this transformation, we must shed the nostalgic narrative of mass industrial employment and embrace a productivity-first mindset. That means:

1. Skills shift: Move from generic vocational training to mechatronics, industrial cybersecurity, and AI analytics.

2. Factory-town reforms: Improve dormitories, urban planning, and female participation via childcare and rental subsidies.

3. Incentivize Industry 4.0: Extend CAPEX super-deductions and skill tax credits for robotics.

The Torque Wrench Gives Way to the Tablet

India’s factories of the future will not look like 1990s Guangdong. They’ll be lean, automated, sensor-rich, and AI-optimized. This is not a policy failure - it’s a policy opportunity. It calls for equipping workers not for repetitive motion, but for intelligent oversight, system design, and quality assurance.

As I wrote in 2016, the road to industrial revival would not go through the past - it would route through silicon chips, code, and collaborative robots. Nine years later, the writing is no longer on the wall - it’s in the wiring of every smart factory across the subcontinent.

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