India's automotive sector lacks a business use case for AI implementation

23 May 2019 2 min. read

Despite targeted investments in the artificial intelligence (AI) space, the Indian automotive sector still lacks the infrastructure to extract the economic potential that AI adoption can generate. This is according to Ananth Chandramouli, Head of Local Business Services for Capgemini India. 

Investment in AI could produce tremendous returns for automotive companies, with some estimates placing the potential increase in operative profit at as much as 16%. Similar potential scenarios exist for most sectors, which has prompted a rush of investment in AI capabilities in recent years.

Last year, global management consultancy Accenture reported that developing strong AI capabilities could boost India’s economy by as much as $1 trillion by as early as 2035. The public and private sectors alike have been working to realise this goal, although some sectors have been slower to move than others.

The automotive sector is among those that has been slow to integrate AI within its operations, primarily due to the scale and costs of their manufacturing processes. Integrating AI at such scale is costly and requires precision, which has prompted a number of firms in the advisory space to begin devising strategies to this end.

India's automotive sector lacks a business use case for AI implementation

However, Capgemini reports that this number remains low, and is dropping further. As per the firm, only 10% of the notable Indian automotive firms have initiated AI integration across the entire scale of their operations. What is worrying experts is that this percentage is lower than the 2017 levels.

“When it comes to the Indian automotive manufacturer, it is trying to figure out what is the right use case that is beneficial both to the it and the end user so that value is created. Otherwise, some of these things (use cases) will die a natural death,” says Chandramouli.

However, these obstacles are preventing innovation as well as investment in the space, to the extent that India ha fallen far behind other countries with respect to AI investment. While India reports just 26% of firms currently at the piloting stage of AI use cases, the US has 25% that are already implementing it to scale.

“The key question for the Indian car manufacturers is who is going to pay for this. I can do all this great stuff but finally value for money market comes into play. Some of these things done are already a reality in the global automotive market. Given that the digital journey has been predominantly on the customer experience front, original equipment manufacturers are in a much better position to drive AI used cases in that area.