The future is promising as Indian manufacturing looks to hit the $1 trillion mark in the next decade, generating 90 million domestic jobs. The Make-in-India programme, announced in 2014, plans to make India a manufacturing hotspot that is equally attractive for domestic and foreign players. But the road to that future is paved with some major challenges, and key among them is the need for Indian manufacturers to be digital-ready. To maintain competitive operating costs, the industry must look towards a smart factory setup that brings in efficiency into every step of production. Moving to smart factory floors Traditional automation which uses automatic monitoring and control of machinery, still heavily relies on manual interventions for decision making. A human operator must issue final commands for machines to act, creating room for error and slowing down overall production output. In contrast, smart factories take a holistic approach, automating the entire value-chain, which includes logistics, manufacturing distribution, retail and even after sales. Machines are capable of artificial intelligence and evolve according to needs, gradually limiting the human role to monitoring, complex or strategic decision-making and exigent situations. Powered by AI The Internet-of-Things (IoT) framework has opened a host of opportunities by bringing together the physical and virtual world. On the shop floor, intelligent computerised numerical control (CNC) machines share data among themselves, creating a free flow of real-time data to help manufacturers understand the nuances of their infrastructure, inventory, and workflow status. Advanced analytics to help Analytics can help businesses determine whom to connect with on what topics, understand consumer behaviour, build better products through customisation, etc. More importantly, it can open up new avenues of revenue for manufacturers. For instance, tracking equipment malfunction and failure rates can lead manufacturers to drive revenue through timely reminders for parts replacement and other consulting services for optimum machine performance. Coming to the smart shop floor, the machines can self-diagnose performance and transmit \u201clive\u201d data to cloud-based data centres. Carefully examining such data will help companies roster preventive maintenance, resulting in significantly less downtimes and production outages. Complex algorithms can be put to work on machine data to cull a deep understanding of production. This also means that manufacturers need to carry spare parts inventory only on an as-needed basis. Way forward in Indian scenario Smart factories have the potential to transform Indian manufacturing into a highly efficient and advanced industry. However, there are certain challenges that need to be addressed on priority. Apart from conducive policy framework and robust network infrastructure, manufacturers, small or large, need to work closely in spearheading digital adoption on a massive scale. It is critical to educate manufacturers about the benefits of digitalisation, and business risks of remaining aloof or ignorant to a fast evolving global digital landscape with potential to disrupt business models across industries. This will encourage more manufacturers to take a dip in digital waters and help India emerge as a top manufacturing destination. Sai Pratyush is additional vice-president \u2013 product marketing \u2013 managed services, Tata Teleservices.