India’s ER&D revenue to cross $100 bn by 2030: Nasscom

shilpa.phadnis@timesofindia.comBengaluruIndia is emerging as a new growth engine for the global engineering, research and development (ER&D) industry, with its ER&D services revenue expected to cross $100 billion by 2030 from an estimated $63 billion in FY26.The growth comes as global ER&D spending is projected to reach $2.48–2.50 trillion by 2030, expanding at a compound annual growth rate (CAGR) of 8–9% between CY24 and CY30. Technological disruption, coupled with a sharper focus on innovation and value creation, is opening up new areas of demand for ER&D services.A significant part of this shift is being driven by artificial intelligence (AI), which is moving beyond productivity-focused use cases and becoming increasingly embedded across the engineering and product development lifecycle.Physical AI is emerging as the next major frontier for engineering, research and development (ER&D), creating new opportunities for Indian ER&D providers to move beyond traditional engineering services and take greater ownership of intelligent products and systems, according to Nasscom.In a study titled Physical AI – Redefining ER&D Opportunity for India, Nasscom said demand for Physical AI-led engineering services is likely to evolve in three waves, beginning with intelligent products and operations and eventually moving towards autonomous systems.The first wave is expected to centre on embedded AI, connected equipment, predictive maintenance and intelligent inspection, as enterprises integrate AI into existing products and industrial systems. This will be followed by greater adoption of simulation, virtual engineering and intelligent manufacturing as companies move from experimentation to production.Over the longer term, autonomous systems could emerge as the largest opportunity as barriers related to safety, reliability, computing and real-world deployment are progressively addressed, the study said.For India, the opportunity is significant as the country already has strong capabilities across AI, embedded systems, automotive and industrial ER&D, simulation and data engineering.“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,” said Rajesh Nambiar, president, Nasscom.“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 said.The shift could also create revenue pools beyond traditional engineering services. Nasscom said ER&D providers could explore models such as AI-as-a-Service, Robotics-as-a-Service, leasing models, autonomous platforms and agentic deployments.Indian ER&D providers can build on existing engineering capabilities to develop reusable intellectual property and capture opportunities across the Physical AI lifecycle, from product development and simulation to deployment and operations.However, realising the opportunity will require companies to invest in cross-disciplinary talent and build strategic partnerships across technology platforms and ecosystems. Domain-specific AI models will also be critical to translate real-world data into systems and processes that continuously improve.The emergence of Physical AI could therefore shift India’s ER&D opportunity from executing engineering projects for global companies to becoming a critical engineering layer connecting AI intelligence with the physical world.The development comes as global ER&D spending rises amid technological disruption and a growing focus among enterprises on innovation, product differentiation and value creation. AI is increasingly moving beyond productivity use cases and becoming embedded across the product and engineering lifecycle, creating new areas of demand for ER&D providers.Get the latest Business News and Live updates. Download the TOI app.