• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

Industry 4.0

The world has already seen three industrial revolutions since the 18th Century and the fourth is underway.

Photo Credit :


The First Industrial Revolution began in the late 1700s wherein the shift occurred from agrarian to machine and process-driven manufacturing, which led to mass production of goods. Then the telegraph was invented, the advent of railways happened and this led to faster movement of people, raw materials and finished goods. Additionally, electricity reached factories and the Second Industrial Revolution took place. The first ever assembly line was successfully created by Oldsmobile as a result of this. The invention and then mass production of computer technology and programmable controls started the Third Revolution in the mid to late 20th Century. The focus here was on digitalisation in factories, with microprocessors and other technology being used in machines. What we are in the midst of now is the Fourth Industrial Revolution, also known as Industry 4.0, a term coined by the German government. While the earlier three revolutions did cause major changes, this fourth one is fundamentally different. It brings about the fusing of physical and digital technologies, known together as cyber-physical systems (CPS), and leverages interconnectivity via the Internet of Things (IoT), real time data analytics, artificial intelligence and cloud computing.

The four core components of Industry 4.0 are:

  • Interconnectivity – all moving parts in the manufacturing process namely, machines, devices, sensors and people are connected and communicating with one another via IoT.
  • Information transparency – data is collected at all intersections and disseminated for informed decision making.
  • Technical assistance – intelligent systems assist humans in decision making and problem solving, as well as for difficult or unsafe tasks.
  • Decentralised decision making – the ability of systems to take decisions and perform tasks autonomously.

According to Klaus Schwab, Founder & Executive Chairman of the World Economic Forum, “The Fourth Industrial Revolution, finally, will change not only what we do but also who we are. It will affect our identity and all the issues associated with it: our sense of privacy, our notions of ownership, our consumption patterns, the time we devote to work and leisure, and how we develop our careers, cultivate our skills, meet people, and nurture relationships.”

In The Fourth Industrial Revolution, Schwab says that the resulting shifts and disruptions mean that we live in a time of great promise and great peril. The world has the potential to connect billions more people to digital networks, dramatically improve the efficiency of organisations and even manage assets in ways that can help regenerate the natural environment, potentially undoing the damage of previous industrial revolutions.

However, Schwab also has grave concerns that organisations might be unable to adapt; governments could fail to employ and regulate new technologies to capture their benefits; shifting power will create important new security concerns; inequality may grow; and societies fragment.

Statista, a German company specialising in market and consumer data, says that the Internet of Things (IoT) is key to the success of Industry 4.0. By this year end, there will be 13.1 billion connected devices and this number is expected to reach 29.4 billion by 2030. By 2025, the IoT data volume will be 79.4 zettabytes, one zettabyte being equal to one trillion gigabytes.

According to the Boston Consulting Group, by 2028, Industry 4.0’s market size will exceed $330 billion, triple its current valuation.

Industry 4.0 is expected to benefit industries and economies in multiple ways.

  • Productivity and efficiency increase – produce faster with optimal raw material utilisation.
  • Better predictability – with real time data analytics, there can be accurate prediction of demand and as a result, better inventory management of both raw material and finished goods. There can be advance warnings of machinery failure leading to preventive maintenance and minimal interruptions of the manufacturing process.
  • Reduced costs – notwithstanding the seemingly high initial costs, the paybacks are immense too. With better use of resources, the cost of manufacturing goes down significantly.

Smart Manufacturing

Smart manufacturing is defined by The National Institute of Standards and Technology USA, as “fully-integrated, collaborative manufacturing systems that respond in real time to meet changing demands and conditions in the factory, in the supply network, and in customer needs”. This envisages the entire production process to be integrated and connected. In a smart factory, there is seamless machine-to-machine and machine-to-people communication with data being exchanged and analysed constantly through a fully digital ecosystem that self learns and undergoes continuous improvement.

Is India ready for Industry 4.0

Robotics is the key driver behind Industry 4.0. The Indian automotive industry has taken the lead and uses robots extensively in their assembly lines. Healthcare is another sector where robotics plays a role in surgery and diagnostics in leading hospitals across the country. Pharma, Electronics and Electrical, Metal as well as Plastic sectors use robotics in some of their processes. India needs to up the ante in terms of robot installations. The other components will automatically fall in place, once this is achieved.

According to the Economic Survey 2021-22, the services sector contributes over 50 per cent to India’s GDP. The services sector accounted for 53.89 per cent of total GVA, while the manufacturing sector contributed 25.92 per cent. Industry 4.0 is the opportunity that we have to make this number go up significantly and for it to succeed, there needs to be a concerted effort from industry, government and academia to create the ecosystem required. This will open up innumerable job avenues for our educated young and let us harness our demographic dividend over the next two decades.

India missed the first two industrial revolutions for a variety of reasons. We did join the third, albeit after a delayed start. Under no circumstances, can we afford to miss the fourth. It is a historical fact that the nations that rode the earlier industrial revolutions became rich and prosperous while the ones that did not, remained poor and backward. We need to seize this opportunity and not let it pass us by.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:

Jayesh Shah

Jayesh Shah

More From The Author >>