India's engineering R&D services revenue projected to cross $100 billion by 2030: Nasscom

Projection and Current Scale

India's engineering research and development (ER&D) services revenue is projected to cross USD 100 billion by 2030, driven by the growing use of artificial intelligence across product development, testing and engineering processes, according to industry body Nasscom. The sector is estimated to have generated revenue of USD 63 billion in FY26.

Nasscom said the projection on Tuesday, citing its study titled 'Physical AI - Redefining ER&D opportunity for India'. At the global level, ER&D spending is projected to reach USD 2.48-2.50 trillion by 2030, growing at an annual rate of 8-9 per cent between 2024 and 2030.

AI's Role in Engineering

Nasscom said AI is increasingly becoming part of core engineering processes, including software development, simulation, testing and systems engineering. This could allow Indian ER&D companies to take on a larger role in global product development rather than remaining limited to traditional engineering work.

Nasscom President Rajesh Nambiar said India's future growth in the sector will depend on combining its existing engineering capabilities with artificial intelligence. "India's ER&D growth will be shaped by how effectively we combine our engineering depth with AI to take on greater ownership of global product development," Nambiar said.

Physical AI as a Growth Area

The study identified Physical AI as an important new growth area for the sector. Physical AI refers to the use of artificial intelligence in areas such as robotics, autonomous systems, intelligent products and industrial environments.

Nambiar said: "Physical AI adds an important new dimension to this opportunity. India has the engineering talent, domain expertise and scale to play a much larger role across this lifecycle."

Three Waves of Demand

According to Nasscom, demand will evolve in three waves. The first wave will see the scaling of intelligent products and operations, connected equipment and predictive maintenance. This will be followed by a surge in simulation, virtual engineering and intelligent manufacturing as companies move from experimentation to production.

Over the longer term, Nasscom expects autonomous systems to emerge as the largest opportunity as barriers related to safety, reliability, compute, and real-world deployment are progressively addressed.

New Revenue Streams and India's Position

The shift is expected to unlock new revenue streams beyond traditional services, including AI-as-a-Service (AIaaS), Robotics-as-a-Service (RaaS), leasing models and agentic deployments.

Nasscom highlighted that India is well-positioned to become a critical engineering layer for the global market, leveraging its existing strengths in AI, embedded systems, automotive and industrial ER&D, simulation and data engineering. However, realising this potential will require a "deliberate focus" on developing cross-disciplinary talent, establishing strategic ecosystem partnerships and creating domain-specific models.