AI, structural shifts to trigger major churn in Indian Industry: EY's Rajiv Memani

Addressing the impact of AI and structural shifts, Memani cautioned that significant churn lies ahead

• Low R&D spending and uneven manufacturing growth challenge India
• AI will sharply divide winners and losers in coming years
• Indian firms urged to prioritize innovation to stay competitive

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Rajiv Memani, Chairman and CEO of EY India, on Friday flagged low R&D spending and uneven manufacturing growth as key challenges for Indian industry, while warning that artificial intelligence (AI) will sharply divide winners and losers in the coming years.

Speaking at the News18 Rising Bharat Summit, Memani said India’s corporate sector must prioritise innovation to stay competitive globally.

“R&D spends are a challenge. Indian industry needs to see how we can build the moat around R&D. The financialisation of the Indian economy has happened much faster than R&D,” he said, pointing to the gap between capital market growth and investments in research and innovation.

On manufacturing, Memani noted that Indian firms have yet to fully seize the opportunity. “We are not seeing so much of Indian companies coming into manufacturing. The opportunity to scale up in India, 5-10 years from now with some of the companies the scale they will be acquiring will be huge,” he said, suggesting that long-term prospects remain strong despite current gaps.

Addressing the impact of AI and structural shifts, Memani cautioned that significant churn lies ahead. “Lot of companies will undergo specially in the services sector and manufacturing, a lot of them will be undergoing lot of change. Some companies will fall by the wayside and companies will double down and succeed,” he said.

On AI adoption specifically, he reiterated the scale of disruption expected across sectors. “Lot of companies will undergo specially in the services sector and manufacturing, a lot of them will be undergoing lot of change. Some companies will fall by the wayside and companies will double down and succeed,” he said.