AI and the Manufacturing and Services Industry in IndiaREPORT BY Geethanjali Jujjavarapu, Elonnai Hickok, Amber Sinha MAPPING BY Shweta Mohandas and Sidharth Ray RESEARCH ASSISTANCE BY Pranav M Bidare and Mayank JainThe Centre for Internet and Society, IndiaDesigned by Saumyaa NaiduShared under Creative Commons Attribution 4.0 International licenseContentsExecutive Summary 1Introduction 1Methodology 2State of AI in Manufacturing and Services in India 3Sector Deep Dives 3Sector Neutral 4Electronics 4Heavy Electricals 5Agriculture 7Automobiles 8IT Services 10Stakeholder Ecosystem 14Government Led Initiatives 18Legal and Ethical Considerations and Policy Landscape 19Security and Safety 19Privacy 20Access and Ownership of Data and Technology and Competition 21Labor and Workers Rights 23Liability, Negligence, and Standards of Care Regime 25Governance and Design 26Challenges to Development and Adoption of AI 27Learnings from Other Contexts 30Recommendations 31Conclusion 36Annex 1 AI in Manufacturing and Services: Stakeholder Mapping 391Executive Summary Reports on the impact of AI in the manufacturing and IT and Services sector in India often paint a picture of stagnant job growth and even job loss.1AI is disrupting traditional business models in the IT sector, the auto sector, and other manufacturing industries.2Experts have highlighted the need to adapt to these changes, beginning with education towards enabling individuals to move and work higher up the value chain in innovative capacities.3Forms of smart manufacturing are also starting to come up in India: Wipro and Infosys have launched AI platforms, and the Indian Institute of Science is developing a smart factory with support from Boeing Company and General Electric.4Identified challenges to the incorporation of AI in the manufacturing sector in India include lack of value creation in the industry, discrepancies in needed skills and available skills, capacity issues amongst professionals, infrastructure inadequacies and challenges in access to technologies.5This report seeks to map the present state of AI in the manufacturing and services industry in India. In doing so, it explores: Use: What is the present use of AI in different sub sectors of manufacturing and services? What is the narrative and discourse around AI and manufacturing and services in India? Actors: Who are the key stakeholders involved in the development, implementation and regulation of AI in the manufacturing and services industry? Impact: What is the potential and existing impact of AI in manufacturing and services? Regulation: What are the challenges faced in policy making around AI in the manufacturing and services industry? Are there key steps that regulators and industry need to take when adopting AI into the sector? IntroductionWith the inroading of Artificial Intelligence (AI) and Internet of Things (IoT) into the manufacturing sector, countries are inevitably faced with a number of policy concerns which need to be addressed at various levels keeping in mind the socio-economic factors that influence policy making in that particular country. India, unlike its G20 counterparts is yet to fully tap the available opportunities that AI presents.6Reports have noted that business sectors and manufacturing units are yet to fully exploit the available talent pool from leading technological universities and budding startups. Companies have analysed that deployment 1 Why Automation is a Threat to Indias Growth, Edd Gent. Retrieved February 23, 2018, from bbc/future/story/20170510-why-automation-could-be-a-threat-to-indias-growth2 Machines vs Humans: The Battle for Jobs in India is Affecting Not Just IT engineers, Madhura Karnik. Retrieved February 23, 2018, from: qz/990558/machines-vs-humans-the-battle-for-jobs-in-india-is-affecting-not-just-it-engineers/3 India and The Artificial Intelligence Revolution, Shashi Shekhar Vempati. Retrieved February 23, 2018, from carnegieendowment/files/CP283_Vempati_final.pdf4 Towards Smart Manufacturing: Industry 4.0 and India, Make in India Portal. Retrieved February 23, 2018, from makeinindia/article/-/v/towards-smart-manufacturing-industry-4-0-and-india 44 AI dominates: Indian IT stares at talent shortage in digital, cloud skills, Ayan Pramanik. Available at: business-standard/article/companies/ai-dominates-indian-it-stares-at-talent-shortage-in-digital-cloud-skills-117010700469_1.html5 AI dominates: Indian IT Stares at Talent Shortage in Digital, Cloud Skills, Ayan Pramanik. Retrieved February 23, 2018, from business-standard/article/companies/ai-dominates-indian-it-stares-at-talent-shortage-in-digital-cloud-skills-117010700469_1.html6 Accelerating Indias Economic Growth With Artificial Intelligence, Accenture (2017), Retrieved March 5, 2018, from accenture/t20171220T030619Z_w_/in-en/_acnmedia/PDF-68/ Accenture-ReWire-For-Growth-POV-19-12-Final.pdf.2of AI to its full potential can add US$975 billion to Indias economy by 2035. This can be achieved with policy makers and the business sector actively working together to achieve this goal.7The most significant impact of AI in the manufacturing sector will be enhancing efficiency, and bringing simplicity into the process of production through mechanization of tasks previously performed by humans. This will also improve machine interactions and promote real time decision making in the process of manufacturing. While a move towards complete automation has its own benefits of accuracy and efficiency, it raises socio-economic and ethical concerns which need to be addressed before fullly integrating AI into the manufacturing sector. This requires policy makers, business sector, IT sector and the government along with other players in the field to reconcile such clashing concerns to arrive at policy solutions which exploit the available technology to achieve economic benefits while balancing the ethical concerns and issues of job displacement.MethodologyFrom CIS literature review on AI undertaken in December 2017, we learned that there is no single definition of AI.8For the purposes of this report, we have drawn upon the definitions outlined in the literature review and reached a broad understanding of AI as a dynamic learning system that can be used in decision making and actioning. This report seeks to map the growth and potential of AI across the manufacturing and services sector in India. The study will look at the existing stakeholders, current and potential uses of AI, impacts of deploying AI in the sector, barriers to AI in India and other relevant topics in order to provide a comprehensive understanding of the state of AI in India and the way forward. Manufacturing is a broad industry that encompasses a number of different sub sectors.9After undertaking a review of sectors via desk research for considerable uptake or potential for uptake of AI in India, for the purposes of this report, the study has been narrowed down to focus on electronics, heavy electricals, agriculture, and automobiles under the manufacturing sector and IT Services under the service sector. For example, through a review of online reports and speaking with experts in the field we learned that AI is not presently being used textiles in India. The study encompasses the development of AI solutions that can be adopted in a companys processes, the use of AI in the process of manufacturing, and insights into the use and incorporation of AI into the end product itself. For the purpose of identifying the use of AI and distinguishing from other technologies, we captured solutions and use examples that self identified as AI or that appeared to take on brain related functions.10Search terms for identifying the use AI included: artificial intelligence, autonomous, machine learning, natural language processing, robotics, computer vision, neural networks, smart factory, and future of work. Search terms to identify sectors included: manufacturing agriculture, IT, IT and services, electronics, heavy electricals, autonomous vehicles, automobiles, and automotive. The report further looks at the impact of AI on the identified sectors along with analysing existing barriers to its deployment, ethical and legal questions and concerns, and possible 7 Ibid.8 Artificial Intelligence: Literature Review (2017, December 16). Retrieved January 5, 2018, from cis-india/internet-governance/blog/artificial-intelligence-literature-review9 For example, The India Brand Equity Foundation 23 Different Sub Sectors Under Manufacturing. For more information see: ibef/download/Manufacturing-Report-Jan-2018.pdf10 This was a distinction and possible way of identifying AI shared in the “AI and Manufacturing” roundtable held on January 19th 2018. 3solutions. It also seeks to outline key government initiatives in the field which boost the use, adoption and development of AI in India. This report forms a part of the larger project on Artificial Intelligence undertaken by the Centre for Internet and Society11and relies on primary and secondary sources including news items, company websites, industry reports, policy and legislation, interviews, and roundtable inputs.12State of AI in Manufacturing and Services in India Deployment of AI in manufacturing and services operations will ensure accuracy and precision in the process and will avoid delays with faster change in operations when required. It will also forecast risks and demands based on available data to ensure optimal production.13The process of manufacturing can be made smarter and environmentally sound, thus avoiding mishaps. The use of AI on the factory floor can help increase productivity and quality along with ensuring a robust safety framework.14The Indian governments push towards Make in India and Industry 4.0 has incentivized startups, software companies and manufacturing units to integrate technology, including AI, into their day-to-day processes to increase accuracy, productivity and efficiency.15To understand the state of AI, this section is comprised of a number of sub-sections that delve into the use of AI in manufacturing and services, legal and ethical considerations, relevant government initiatives, challenges, and recommendations associated with the uptake and deployment of AI in manufacturing and services. Sector Deep Dives While our research showed that the adoption of AI is not widespread across all sectors of the manufacturing industry, there has been significant transformation in certain parts of the industry with companies developing, adopting, and integrating AI technologies and solutions into their processes and products - including electronics, heavy electricals, automobile, and agriculture. The services sector has seen significant uptake of AI - in particular the IT sector. At the same time there are a number of sector neutral companies that develop AI technologies that can be applied to the process of manufacturing and services. 11 Y. Paul, Centre for Internet and Society (2018, January 26). Artificial Intelligence and the Healthcare Industry in India, Retrieved February 23, 2018, from cis-india/internet-governance/blog/artificial-intelligence-and-the-healthcare-industry-in-india12 S. Mohandas, Centre for Internet and Society (2018, February 13). AI and Manufacturing and Services in India: Looking Forward. Retrieved February 23, 2018, from cis-india/internet-governance/blog/ai-and-manufacturing-and-services-in-india-looking-forward13 Artificial Intelligence and Robotics - 2017: Leveraging Artificial Intelligence and Robotics for Sustainable Growth, PWC. Retrieved February 23, 2018, from pwc.in/assets/pdfs/publications/2017/artificial-intelligence-and-robotics-2017.pdf 14 Ibid.15 AI, Cognitive Technologies and IoT Spurring Digital India: Microsoft, Jasmeen Nagpal. Retrieved February 23, 2018, from cio.economictimes.indiatimes/news/strategy-and-management/ai-cognitive-technologies-iot-spurring-digital-india-microsoft/620776944Sector Neutral There are a number of companies that offer AI technologies and solutions that can be used in a number of sectors in manufacturing and services. Our study identified four such domestic companies and one international company that was providing solutions across sectors. These companies provided AI solutions including training a virtual robot on an AI based software platform, providing diagnostics and prognostics through Machine Learning and Artificial Intelligence and AI based surveillance solution. For example, GreyOrange, a multinational firm which designs, manufactures and installs modern robotic systems for automation at fulfilment centres and warehouses, has set up a Research and Development Centre in Gurgaon.16GreyOrange provides warehousing solutions with the help of bots, pick-up stations, Mobile Storage Units (MSUs), along with a software that runs business logic of inventory management and robotics.17Flutura Decision Sciences and Analytics is a company heavily relying on IoT which uses machine signals in order to power new monetizable business models.18It uses its data science platform, Cerebra, to spring up undetected machine signals which are capable of impacting industrial outcomes in order to fill gaps in the marketplace. Covacsis designs and implements Intelligent Plant Framework (IPF) which is being used by manufacturing plants across sectors. IPF works without any peer assistance and relies on big data analytics, IoT and provides real-time outputs. Further, it extracts data from all the machines on the factory floor without any differentiation based on their make.19Electronics The electronics sector in India includes producers of electronic equipment for industries and consumer electronics products, such as computers, televisions and circuit boards. These industries include telecommunications, equipment, electronic components, industrial electronics and consumer electronics, and the companies that produce electrical equipment, manufacture electrical components and retail these products to make them available for consumers. The electronics market of India is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022 from US$ 69.6 billion in 2012. The market is projected to grow at a compound annual growth rate of 24.4% during 2012-2020.20Machines driven by AI are now being used in production units in India that manufacture electronic goods and appliances. The use of intelligent systems is helping the sector avoid manual testing processes with the help of IoT and detection mechanisms.21AI is also being integrated into end products as robotic appliances, user inter