KEY HIGHLIGHTS

• India's ER&D services to exceed $100 billion by 2030
• AI's transformative role in global product development
• Physical AI as a key emerging opportunity
• India's strategic position in AI, embedded systems, and industrial ER&D
• Nasscom's vision for India's ER&D future

Projections and Global Trends

India's ER&D services are set to cross $100 billion by 2030, up from an estimated $63 billion in FY26, according to Nasscom. This projection aligns with the global ER&D spending forecast, which is expected to reach $2.48–2.50 trillion by 2030. This growth is driven by a compound annual growth rate of 8-9% between CY24 and CY30. The shift towards software-defined, data-driven, and intelligent engineering is opening new avenues for Indian ER&D companies to expand beyond traditional engineering execution and take on greater system-level and lifecycle ownership.

The Role of AI in ER&D

AI is increasingly embedded across the engineering lifecycle, moving beyond productivity-focused applications into product design, development, testing, and operations. This integration is reshaping global product development, offering significant opportunities for Indian ER&D companies. AI's role is expanding from simple automation to complex, intelligent systems that can predict, analyze, and optimize engineering processes.

Physical AI and Emerging Opportunities

Physical AI, which brings AI capabilities into physical products, equipment, and industrial environments, is a key emerging opportunity. According to Nasscom’s study, Physical AI – Redefining ER&D Opportunity for India, demand is likely to develop in three broad waves. The first wave centers on intelligent products and operations, including embedded AI, connected equipment, predictive maintenance, and intelligent inspection.

India's Position in the Global ER&D Market

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 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.

Key Insights from Nasscom

Rajesh Nambiar, President, Nasscom, emphasized that 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. 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.

FAQs

**Q: What is the projected revenue for India's ER&D services by 2030? **A: India's ER&D services are projected to exceed $100 billion by 2030.

**Q: How is AI transforming global product development? **A: AI is transforming global product development by integrating into product design, development, testing, and operations, moving beyond simple automation to complex, intelligent systems.

**Q: What is Physical AI and why is it significant? **A: Physical AI brings AI capabilities into physical products, equipment, and industrial environments. It is significant as it represents a key emerging opportunity in the ER&D sector.

Conclusion

India's ER&D services are poised for significant growth, driven by the transformative role of AI and emerging technologies. With its strong foundation in AI, embedded systems, and industrial ER&D, India is well-positioned to capture new revenue streams and play a larger role in global product development.

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