India's Engineering Research and Development (ER&D) sector is poised for significant growth, projected to surpass USD 100 billion in revenue by 2030, primarily fuelled by the transformative integration of Artificial Intelligence (AI) into engineering workflows.
Key Points
- India's ER&D sector is projected to reach over USD 100 billion in revenue by 2030, up from an estimated USD 63 billion in FY26.
- The growth is primarily driven by the integration of Artificial Intelligence (AI) into core engineering workflows, making engineering software-defined and data-driven.
- Global ER&D spending is expected to grow at an 8-9% CAGR, reaching USD 2.48-2.50 trillion by 2030.
- Demand will evolve in waves, starting with intelligent products and operations, moving to virtual engineering, and eventually autonomous systems.
- India is strategically positioned to leverage its strengths in AI and embedded systems to become a critical global engineering layer.
India's engineering research and development (ER&D) sector is projected to surpass USD 100 billion in revenue by 2030, driven by the integration of Artificial Intelligence (AI) into core engineering workflows, IT industry body Nasscom said on Tuesday. The sector, which is estimated to generate USD 63 billion in revenue in FY26, is witnessing a significant shift as engineering becomes increasingly software-defined, data-driven and intelligent.
Projected Growth And Global Trends
"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 by 2030. Technological disruption and a sharper focus on innovation and value are creating new areas of demand," Nasscom said.
Nasscom's report, titled 'Physical AI - Redefining ER&D opportunity for India', suggests that demand will evolve in three waves. The first wave will see the scaling of intelligent products and operations, connected equipment and predictive maintenance. This will be followed by a surge in simulation, virtual engineering and intelligent manufacturing as companies move from experimentation to production.
Over the longer term, Nasscom expects autonomous systems to emerge as the largest opportunity as barriers related to safety, reliability, compute, and real-world deployment are progressively addressed.
New Revenue Streams And India's Strategic Position
The shift is also expected to unlock new revenue streams beyond traditional services, including AI-as-a-Service (AIaaS), Robotics-as-a-Service (RaaS), leasing models and agentic deployments.
Nasscom highlighted that India is well-positioned to become a critical engineering layer for the global market, leveraging its existing strengths in AI, embedded systems, automotive and industrial ER&D, simulation and data engineering.
However, realising this potential will require a "deliberate focus" on developing cross-disciplinary talent, establishing strategic ecosystem partnerships and creating domain-specific models to translate real-world data into improving systems.
"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," Nasscom President Rajesh Nambiar said. "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," he added.
