AI to drive India’s ER&D revenue past $100B by 2030
Nasscom highlighted that Indian ER&D companies have the opportunity to expand beyond their traditional offerings through AI
India's engineering research and development (ER&D) services revenue is projected to cross $100 billion by 2030, up from an estimated $63 billion in FY26, as artificial intelligence (AI) and emerging technologies reshape global product development, according to Nasscom.
The projection comes as global ER&D spending is expected to reach $2.48–2.50 trillion by 2030, growing at a compound annual growth rate of 8-9% between CY24 and CY30. The shift towards software-defined, data-driven and intelligent engineering is creating new opportunities for Indian ER&D companies to expand beyond traditional engineering execution and take on greater system-level and lifecycle ownership.
AI is increasingly being embedded across the engineering lifecycle, moving beyond productivity-focused applications into product design, development, testing and operations. A key emerging opportunity is Physical AI, which brings AI capabilities into physical products, equipment and industrial environments.
According to Nasscom’s study, Physical AI – Redefining ER&D Opportunity for India, demand is likely to develop in three broad waves. The first is expected to centre on intelligent products and operations, including embedded AI, connected equipment, predictive maintenance and intelligent inspection.
The second wave is likely to see greater adoption of simulation, virtual engineering and intelligent manufacturing as enterprises move from experimentation towards production. Over the longer term, autonomous systems could become the largest opportunity as challenges related to safety, reliability, computing and real-world deployment are addressed.
India is well positioned to benefit from this transition, given its existing capabilities in AI, embedded systems, automotive and industrial ER&D, simulation and data engineering. Indian providers could also create reusable intellectual property and capture new revenue pools through AI-as-a-Service, Robotics-as-a-Service, leasing models, autonomous platforms and agentic deployments.
“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,” said Rajesh Nambiar, President, Nasscom. He added that Physical AI could enable India to play a larger role across the product lifecycle through systems-led engineering and co-creation of intelligent products and platforms.