KPMG: India's manufacturing needs work redesign, AI for productivity

India’s manufacturing sector is entering a new productivity era, with future gains depending on redesigning work, reshaping organisations, deploying talent, and leveraging digital tech and AI, according to a recent KPMG report.

India’s manufacturing sector is entering a new productivity era, with future gains set to depend increasingly on how companies redesign work, reshape organisations and deploy talent, while leveraging digital technologies and AI, as per a KPMG report.

According to KPMG, the traditional drivers of manufacturing productivity—wage arbitrage, scale economics and lean compliance—are beginning to flatten. It noted in its report, “Productivity is Indian manufacturing’s most powerful growth lever. A sustained 30% productivity gain could drive nearly 35% of future output.”

However, productivity improvements remain uneven across India's manufacturing sector. Over 70 per cent of large manufacturing companies would need transformative measures to achieve the productivity growth rate required for India's manufacturing ambition.

Redesigning Work for the Next Wave of Productivity

“The next wave will come from how work is reimagined, how organisations are shaped, and how talent is deployed,” KPMG said.

The report outlines the areas that could drive these productivity gains, beginning with how work is designed and value is created across the manufacturing value chain.

Value Creation and Role Architecture

According to the KPMG report, productivity will increasingly depend on end-to-end value creation, including efforts to eliminate non-value-adding activities, rework, delays and unnecessary handoffs. It also highlights the importance of role architecture and job design, including how activities are grouped into roles and opportunities for role consolidation.

Organisational Structure and Workforce

At the organisational level, productivity will depend on how value flows across the organisation, with a focus on decision rights and governance, including approval processes and delegation thresholds.

The report also focuses on the workforce dimension of productivity. This includes manpower norms and productivity, measured through the number of full-time employees (FTEs) required for a given unit of output, along with internal and external benchmarking and dynamic manpower norms.

Leveraging AI Beyond Automation

As companies rethink work, organisational structures and workforce deployment, the report also highlights the growing role of AI in reshaping the manufacturing value chain, while noting that its impact will extend beyond simply automating existing processes.

“Competitive advantage from AI will come from rethinking roles, workflows, and decision rights, not simply layering AI onto existing ways of working. And where judgment, dexterity, relationships, and accountability matter most, human-led work will remain essential,” it said. (ANI)

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