Business EconomyPosted at: Sep 1 2026 5:04PM


AI reshaping India's ER&D opportunity as engineering moves towards intelligent, autonomous systems: Nasscom

New Delhi, Sep 1 (UNI) Artificial intelligence is increasingly moving into the core of engineering research and development (ER&D), changing how products are designed, developed, tested and operated.
As engineering becomes more software-defined, data-driven and intelligent, India's ER&D industry has an opportunity to expand its role in global product development and take on greater system-level and lifecycle ownership.

Global ER&D spending is projected to reach USD 2.48–2.50 trillion by 2030, growing at a CAGR of 8–9 per cent between CY24 and CY30. With an estimated revenue of USD 63 billion in FY26, India's ER&D services revenue is projected to cross USD 100 billion in revenue by 2030. Technological disruption and a sharper focus on innovation and value are creating new areas of demand, according to a Nasscom media statement.
A significant part of this shift is being driven by AI. AI is moving beyond productivity use cases and becoming embedded across the engineering lifecycle. This is also expanding the scope of what ER&D companies can address. Physical AI is emerging as an important next frontier for ER&D.
Nasscom also released a study titled Physical AI – Redefining ER&D opportunity for India. For ER&D providers, demand is likely to evolve in three waves. Intelligent products and operations, including embedded AI, connected equipment, predictive maintenance and intelligent inspection, are expected to scale first as enterprises embed AI into existing systems.
Simulation, virtual engineering and intelligent manufacturing will become increasingly important as companies move from experimentation to production. Over the longer term, autonomous systems could emerge as the largest opportunity, as barriers around safety, reliability, compute, and real-world deployment are progressively addressed.
For India, Physical AI presents a significant opportunity, with Indian ER&D providers well positioned to become a critical engineering layer connecting intelligence with the physical world.
The country already brings together strong capabilities in AI, embedded systems, automotive and industrial ER&D, simulation, and data engineering.
ER&D providers in India can build on these foundations to move beyond traditional engineering execution by creating reusable IPs and capturing new opportunities across the Physical AI lifecycle.
It also opens new revenue pools beyond traditional engineering services, including AI-as-a-Service, Robotics-as-a-Service, leasing models, autonomous platforms and agentic deployments.
Rajesh Nambiar, President, Nasscom, said, "India's ER&D growth will be shaped by how effectively we combine our engineering depth with AI to take on greater ownership of global product development. Physical AI adds an important new dimension to this opportunity. India has the engineering talent, domain expertise and scale to play a much larger role across this lifecycle. The opportunity now is to move further towards systems-led engineering and co-creation of intelligent products and platforms."
Realising this opportunity will require a deliberate focus on cross-disciplinary talent, strategic platform and ecosystem partnerships, and domain-specific models to translate real-world data into continuously improving systems and processes.
UNI BM RSA
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