Industry 4.0: Benefits and Challenges

By Sudheer Kumar K|Updated : November 28th, 2020

Industry 4.0, also called the Fourth Industrial Revolution, is a very important topic in the Science and Technology section of UPSC IAS Mains GS Paper 3.

Industry 4.0 (Fourth Industrial Revolution)

Earlier industrial revolutions liberated mankind from animal power, made mass production possible and brought digital capabilities to billions of people. But the Fourth Industrial Revolution is different from them.

Industry 4.0 is characterized by an array of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human.

Schumacher, Erol & Sihn, (2016) defines “Industry 4.0 is surrounded by a huge network of advanced technologies across the value chain. Artificial Intelligence, Automation, Robotics, Internet of Things and Additive Manufacturing are bringing in a brand new era of manufacturing processes. The boundaries between the real world and virtual reality are getting blurred and causing a phenomenon known as Cyber-Physical Production Systems (CPPS).”

It is characterized by the aspects of a new level of controlling, organizing and transforming the entire value chain with the life cycle of products, resulting in higher productivity and flexibility through three types of effective integration which are horizontal, vertical and end-to-end engineering integration.

Positive Impact of Industry 4.0

Professor Klaus Schwab says Industry 4.0 is differentiated by a few characteristics of new technologies, for example: physical, digital, and biological worlds. Schwab pointed out that Industry 4.0 is one of the most important concepts in the development of global industry and the world economy.

It digitizes the manufacturing sector with built-in sensing devices virtually in all manufacturing components, products and equipments.

It unleashed the concept of smart manufacturing by facilitating and integrating large scale machine-to-machine communication (M2M) and the Internet of Things (IoT) for increased automation, improved communication and self-monitoring, and production of smart machines that can analyze and diagnose issues without the need for human intervention.

In smart factories, machinery, storage systems and production are capable of carrying out complex tasks, exchanging information and giving instructions to each other, without the need for human involvement.

It can provide predictive maintenance of equipment with the integration of IoT devices like sensors into the machinery. It is possible to predict product performance degradation, autonomously manage and optimize product service needs and consumption of resources which lead to optimization and reduction of costs. That means any equipment in one location can be controlled from any other location.

With additive manufacturing process like 3D printing, it improves designs with increased performance, flexibility, and cost-effectiveness. It also reduces human errors and enables to produce goods cost-effectively.


Challenges in adopting Industry 4.0

Any new technology that offers advantages also poses various challenges. Industry 4.0, though, is touted as a harbinger for the development of the concept of the global industry it has several challenges to be addressed before its expansion.

  • Employment opportunities:
    • Large-scale layoffs in IT Sector especially employees at the lower end.
    • Displacement of jobs for unskilled workers in the housekeeping sector due to the adoption of labour displacing technologies and automation in manufacturing
    • In the manufacturing sector, the new started start-ups are technologically intensive digitally with less scope for job creation.
  • It involved huge costs with unclear economic benefits
  • Lack of skilled employees- insufficient qualifications of employees
  • Lack of standards and regulations
  • Surveillance and distrust
  • Stability and integrity of production processes
  • Unclear legal complications– privacy and data security issues 

The readiness of India for Industry 4.0

  • In order to foster a best-in-class manufacturing infrastructure in India, the “Make in India” initiative is shaping the wider adoption of ‘Industry 4.0’.
  • Given India’s strength in Information Technology and a huge workforce of IT professionals, the journey towards manufacturing through Industry 4.0 has already started.
  • Under ‘Smart Cities Mission’, the projects to build 100 smart cities across India are being pushed as the forerunners of the Industry 4.0 environment.
  • The Indian government has already launched Artificial Intelligence Mission and National Mission on Interdisciplinary Cyber-Physical Systems.
  • Digital India Campaign has brought high-speed broadband connectivity to rural and remote areas through Bharath Net. This has increased access to the internet through smartphones that furthered an increase in e-commerce in recent years.
  • Apart from the consumer goods market, with the advent of Big Data and Analytics, IoT, artificial intelligence, blockchain and machine learning, innovative ways of accessing services and conducting commerce have emerged.
  • India has a huge repository of Big Data collected via Aadhaar, passport, PDS, voter card etc. and using data mining, analytics and other apps, this data can be used for providing smart solutions for effective governance.
  • The World Economic Forum (WEF) launched a Centre for the Fourth Industrial Revolution at Mumbai, India. It is fourth such centre, and the other three are based at San Francisco, Tokyo and Beijing.
    • It aims to bring together the government and business leaders to pilot emerging technology policies
    • It selected Drones, artificial intelligence and blockchain as the first three project areas
    • NITI Aayog coordinates the partnership between government and the Centre. 
    • It focuses on:
      • Increasing access to data to accelerate the adoption of artificial intelligence in socio-economic areas like education, healthcare and agriculture.
      • Increased application of smart contracts to boost productivity and transparency while reducing inefficiency.
      • Undertaking a drone mapping operation in the agriculture sector by the Maharashtra government in collaboration with the Centre.

Hence the present techno-economic conditions in India are favouring the fourth industrial revolution to take off. 


However, given the above challenges and huge unemployment and inadequacies in upskilling, the journey towards Industry 4.0 cannot be smooth.  There is a huge skill shortage in India, though the Union government has taken initiatives like Innovation Fund for Secondary Education, SWAYAM, Pradhan Mantri Kaushal Kendras (PMKKs), SANKALP etc, to train youth and develop skills.

However, these schemes are lagging to meet the actual requirement of skilling. The State Governments need to accelerate their efforts and focus fully on making school education more job-oriented by instilling more of vocational streams, ICT and practical training.

It is essential to focus on industry integrated job market-oriented curriculum for India to be able to reap its demographic advantage into a demographic dividend. 


Industry 4.0 plays a critical role to transform whole value chains of the life cycle of goods while developing innovative services and products in the manufacturing industry which involves the connection of systems to things that creates self-organizing and dynamic control within an organization.

Industry 4.0 is crucial for India to achieve rapid development but at the same time, it should be inclusive. Hence, India needs to skill up its youth with the necessary skills required by Industry 4.0 and also develop standards and regulations to ward off any legal and social issues to crop up.

Prof. Schwab calls for governments and citizens to “together shape a future that works for all by putting people first, empowering them and constantly reminding ourselves that all of these new technologies are first and foremost tools made by people for people.”

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