Engineering research and development (ER&D) sector could nearly double to US$ 100 billion in five years: Nasscom

India’s engineering research and development (ER&D) sector is projected to nearly double to US$ 100 billion by the end of this decade, compared to US$ 56 billion in FY25, according to Chairman of Nasscom’s ER&D Council and Chief Executive Officer of KPIT Technologies, Mr. Kishor Patil. Growing faster than the broader information technology (IT) sector, which expanded at just 4% due to global macroeconomic headwinds, ER&D posted a 7% YoY growth in FY25. The sector spans industries such as automotive, semiconductors, energy, telecom, healthcare, life sciences, industrials, and consumer electronics, and is expected to benefit from double-digit annual spending growth in the coming years.
He highlighted that wider adoption of artificial intelligence (AI), deeper integration of productisation and platform-led models, and a stronger ecosystem of enterprises, start-ups, and deep-tech firms are critical to achieving this growth. Europe is emerging as a major market for Indian ER&D players, particularly as automakers respond to pressure from Chinese competitors. Tata Technologies’ acquisition of German firm ES-Tec for EUR 75 million (US$ 88.6 million) reflects this expansion strategy. Opportunities are also rising in aerospace and defense, with Airbus and European defence contractors seeking additional engineering capacity. Additionally, generative AI (GenAI) is transforming the sector, with GenAI-enabled applications expected to grow from 10% today to 25% by 2025. IT budget allocations for GenAI are also forecast to rise from 4% in 2024 to over 6% in 2025, accelerating innovation and reshaping global competitiveness.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.