The Role of Digitalization and Innovation in the Development of the

Secondary Sector of the Indian economy

Aparna Singh (200127), Shambhavi Singh (200103), Jyoti Devi (200070), Priyanshi Gupta
(200092)

Department of Economics, Gargi College

62277603: Economics: Development & Policy in India- II

Miss Aishwarya

April 17, 2023

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 Abstract

This research paper explores the role of digitalisation and innovation in transforming the
secondary sector of the Indian economy. The study reviews relevant literature and data to
understand the current state of the secondary sector in India, its challenges and opportunities. It
also examines the impact of digitalisation and innovation on the sector, including the role of e-
commerce platforms, government policies, and emerging technologies such as artificial
intelligence and the Internet of Things. The research findings also suggest that digitalisation and
innovation have the potential to transform the secondary sector in India by enhancing
productivity, efficiency, and competitiveness. E-commerce platforms have enabled small and
medium-sized enterprises to access a wider market and reduce transaction costs, while
government policies such as the Digital India initiative and the Make in India campaign have
created an enabling environment for innovation and entrepreneurship.

Highlighting the challenges faced by the sector, including the digital divide, the need for
upskilling and reskilling of the workforce, and regulatory barriers. It suggests that addressing
these challenges will require a multi-stakeholder approach, involving government, industry,
academia, and civil society. Overall, the research paper concludes that digitalisation and
innovation have the potential to transform the secondary sector in India and that concerted efforts
are needed to leverage their full potential and address the challenges faced by the sector. The
study provides insights and recommendations for policymakers, businesses, and other
stakeholders seeking to promote digitalisation and innovation in the Indian economy.

Keywords: digitalisation, innovation, secondary sector, E-commerce, Make in India

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 Aim

The role of digitalization and innovation in transforming the secondary sector of the
Indian economy

Objectives

To assess the challenges and opportunities of digitalization in the secondary sector in

India, including issues related to skill development, workforce displacement, cybersecurity, and
policy implications.

Furthermore, to also examine the role of government policies and regulatory frameworks
in promoting digitalization in the secondary sector, including initiatives such as Digital India,
Make in India, and Skill India, and their effectiveness in fostering digital transformation and
inclusive growth.

Introduction

Digitalization and innovation are two intertwined forces that have been transforming the
secondary sector of the Indian economy in recent years. The rapid adoption of digital
technologies, coupled with innovation in business models, processes, and products, has led to
significant changes in the manufacturing and construction industries, collectively called the
secondary sector. This research paper aims to provide a comprehensive analysis of the role of
digitalization and innovation in shaping the secondary sector of the Indian economy.

The secondary sector, encompassing the manufacturing and construction industries, plays
a crucial role in the Indian economy, contributing to economic growth, employment generation,
and export earnings. In recent years, the secondary sector has been undergoing significant
transformation driven by digitalization and innovation. It identifies the key opportunities and
challenges arising from this transformation, including changes in employment dynamics, skill
requirements, and market competition. The paper also emphasises the potential of digitalization
and innovation in promoting sustainable and inclusive development in the secondary sector,
including environmental sustainability, social inclusion, and economic growth.

Digitalization refers to the adoption and integration of digital technologies and processes
in various aspects of the secondary sector, from production and supply chain management to
marketing and customer engagement. It has the potential to enhance productivity, efficiency, and
competitiveness, and create new growth opportunities. Innovation, on the other hand, involves
the creation and implementation of novel ideas, technologies, and processes that bring about
improvements and value creation in the industry. Innovation can lead to new product offerings,
improved processes, and more effective business models, resulting in competitive advantage and
sustainable growth.

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 In the Indian context, digitalization and innovation are gaining traction in the secondary
sector, driven by factors such as increasing global competition, changing customer preferences,
technological advancements, and government initiatives such as Digital India and Make in India.
These forces are transforming the secondary sector, creating new opportunities and challenges
for firms, workers, and policymakers.

This research paper aims to provide a comprehensive analysis of the role of digitalization
and innovation in transforming the secondary sector of the Indian economy. It will review the
existing literature on digitalization and innovation, examine the current state of the secondary
sector in India, and explore the adoption of digital technologies and innovation in the industry.
The paper will also highlight the impacts, challenges, and opportunities arising from this
transformation and provide recommendations for policymakers, industry practitioners, and other
stakeholders to leverage digitalization and innovation for sustainable and inclusive growth in the
secondary sector.

The paper begins by reviewing the literature on digitalization and innovation,

highlighting their key concepts, drivers, and impacts. It then focuses on the Indian context,
providing an overview of the current state of the secondary sector, including its contribution to
the national economy, employment generation, and challenges faced. The paper further delves
into the role of digitalization in the secondary sector, examining the adoption of digital
technologies such as automation, robotics, the Internet of Things (IoT), and 3D printing, and
their effects on productivity, efficiency, and competitiveness. The paper also analyzes the role of
digital platforms, e-commerce, and government policies in promoting digitalization in the
secondary sector of the Indian economy.

The paper then shifts its focus to innovation in the secondary sector, exploring the
various forms of innovation, including product, process, and business model innovation, and
their impacts on market positioning, value creation, and sustainable growth. It further examines
the drivers of innovation in the secondary sector, including technological advancements, market
forces, and organizational capabilities, and identifies the challenges and enablers of innovation in
the Indian context.

Finally, the paper concludes with recommendations for policymakers, industry

practitioners, and other stakeholders on strategies for leveraging digitalization and innovation in
the secondary sector of the Indian economy. It emphasizes the need for proactive policy
measures to foster digital readiness, innovation capabilities, and inclusive growth, and identifies
potential areas for future research to further deepen the understanding of the role of digitalization
and innovation in transforming the secondary sector in the Indian context.

Overall, this research paper provides a comprehensive analysis of the role of

digitalization and innovation in shaping the secondary sector of the Indian economy, shedding
light on their impacts, challenges, and opportunities, and providing valuable insights for

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policymakers and stakeholders to navigate the evolving landscape of the secondary sector in the
era of digital transformation and innovation.

Literature review

Digitalisation is believed as transforming tangible products and services into digital form.
It is also referred to as the application of digital technology in every aspect of organisations and
human society. Digitalisation led to changes and advantages over existing ways of working.
(Parviainen, Tihinen,Kaariainen& Teppola,2017). In recent years, digitalisation has transformed
and provoked the entire society resulting in new working skills, modern cultural conditions, and
creative communication and entrepreneurship tools (Newell & Marabelli, 2015). Digitalisation is
conditional and it is based on many factors in an economy like facilities, capabilities and other
organisational conditions. In any economy, policies should not only promote digitalisation but
also focus on a variety of other country-specific factors like economic growth and rising
productivity. ( Dalum et al.1999; Castellacci 2006).

The digital revolution has opened up new technology potential for mechanisation,
specialisation, and labour division in the secondary sector. The adoption of digital technologies
in the secondary sector has the potential to drive growth and competitiveness. ( McKinsey
Global Institute report on Digital India). One of the key benefits of digitalization in the
secondary sector is the ability to optimize production processes. Digital technologies such as the
Internet of Things (IoT), Artificial Intelligence (AI), and Big Data analytics can be used to
collect and analyze data from machines and equipment, enabling manufacturers to identify
inefficiencies and opportunities for improvement. This can result in improved productivity,
reduced downtime, and lower costs. (CII report on Industry 4.0).

Digitalization can also enable better collaboration and communication between different
stakeholders in the secondary sector, such as suppliers, manufacturers, and distributors. This can
result in better coordination and faster response times. (WEF report on Digital Transformation in
Manufacturing). Furthermore, digitalization can enable the development of new business models
in the secondary sector. For example, the use of digital technologies can enable manufacturers to
offer new services, such as predictive maintenance or asset management. (PwC India report on
Industry 4.0). The secondary sector's contribution to India's Gross Domestic Product (GDP) was
26.7% in 2019-20. However, its share in GDP has been declining over the years as the services
sector has been growing at a faster pace and the employment in the secondary sector in India was
around 26.2% of the country's workforce in 2019-20. ( Economic Survey of India,2020-21).

However, the secondary sector has been facing challenges such as low productivity,
inadequate infrastructure, and outdated technology, as noted in a report by the Ministry of
Statistics and Programme Implementation (MOSPI) of India. Digital platforms, e-commerce, and
government policies play a significant role in promoting digitalization and the secondary sector
of the Indian economy. Digital platforms and e-commerce have enabled manufacturers and

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distributors to reach new customers and markets, both within India and abroad. According to a
report, e-commerce has the potential to increase the contribution of the secondary sector to the
Indian economy by up to USD 300 billion by 2025. Additionally, digital platforms can provide
manufacturers with access to data and insights on consumer behaviour and preferences, enabling
them to develop more targeted and effective marketing strategies. ( Deloitte India report on e-
commerce).

To support the adoption of digital technologies in the secondary sector, the Indian
government has implemented various policies and initiatives. For example, the National Policy
on Electronics 2019 aims to promote the growth of the electronics manufacturing industry in
India, which is a key contributor to the secondary sector. The policy includes measures to attract
foreign investment, promote research and development, and support the development of a skilled
workforce. The government has also launched the Digital India initiative, which aims to
transform India into a digitally empowered society and economy. The initiative includes
measures to promote the adoption of digital technologies in various sectors, including the
secondary sector. For example, the initiative includes the promotion of digital payments and the
development of digital infrastructure, such as broadband networks and data centres.

The literature also highlights the role of innovation in transforming the Indian secondary
sector. The Make in India program, launched in 2014, aims to encourage manufacturing in India
and promote innovation in the sector. Additionally, the government has launched the Atal
Innovation Mission, which seeks to promote innovation and entrepreneurship in the country.
These initiatives have helped in creating an ecosystem that fosters innovation in the sector.

Overall, the literature highlights the significant impact of digitalization and innovation on
the Indian secondary sector. The adoption of digital technologies and innovation has helped in
optimizing production, reducing costs, creating new business models and revenue streams, and
creating new jobs in the sector. As India continues to push for economic growth, digitalization
and innovation will remain crucial factors in transforming the secondary sector of the economy.

Methodology

Research design refers to the overall strategy or plan that you will use to conduct your
research and address your research question. It outlines the methods and procedures that you will
use to collect and analyze data, as well as how you will interpret and present your findings.
Quantitative data is information about quantities, and therefore numbers and qualitative data is
descriptive, and regards phenomena which can be observed but not measured, such as language.

The methodology used for this paper is a secondary method and the data was collected
from various secondary resources such as journals, articles, libraries and newspapers. The data
analysis was held based on annual reports of various E-business companies displayed publicly.
The data taken from the related research paper were analysed and hence descriptive methodology

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was followed by the researcher. Two research questions were sought to be answered namely,
how to assess the challenges and opportunities of digitalization in the secondary sector in India,
including issues related to skill development, workforce displacement, cybersecurity, and policy
implications. Additionally, to also examine the role of government policies and regulatory
frameworks in promoting digitalization in the secondary sector, including initiatives such as
Digital India, Make in India, and Skill India, and their effectiveness in fostering digital
transformation and inclusive growth.

Qualitative data can provide rich and detailed insights into the experiences and
perspectives of individuals and organizations and can help to uncover complex social processes
and relationships. In this study, qualitative data collection methods such as interviews and open-
ended survey questions allowed the researchers to explore the nuances and complexities of the
challenges and opportunities of digitalization in the secondary sector in India. For example,
through interviews with managers, employees, educators, and policymakers in the secondary
sector, the researchers could gain a deeper understanding of their experiences and perspectives
on the impact of digitalization on their work and the sector as a whole. Open-ended survey
questions could allow respondents to provide detailed feedback on their experiences and
suggestions for policy and practice related to digitalization in the sector. Qualitative data analysis
methods such as thematic analysis can help to identify patterns and themes within the data and
provide insights into the underlying factors and processes that contribute to the challenges and
opportunities of digitalization in the secondary sector in India.

The research is descriptive and exploratory. Descriptive in the sense that it establishes a
relationship between the literacy rate of the country and the given parameter. Exploratory
research in the sense that it collects data from various parameters and tends to establish a cause-
and-effect relationship between the parameters. The data taken from the related research paper
were analyzed and hence descriptive methodology was followed by our group. While qualitative
research has some limitations, it can still provide valuable insights into the challenges and
opportunities of digitalization in the secondary sector in India. It can help researchers to
understand the perspectives and experiences of individuals and organizations in this sector, and
to identify potential areas for further investigation.

Qualitative research typically does not involve statistical analysis, which may limit the
ability to quantify and measure the impact of digitalization in the secondary sector in India. This
may make it difficult to compare and contrast different findings or draw conclusions that are
based on rigorous statistical evidence, while here qualitative research is often context-specific,
which means that the findings may not apply to other contexts or settings. This may limit the
transferability of the findings and make it difficult to apply them to other situations.

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 Discussion

The current state of the secondary sector due to digitalization and innovation

The digitalization of the secondary sector in India presents both challenges and
opportunities. The secondary sector refers to industries involved in the production and
manufacturing of goods. The current state of the secondary sector in India due to digitalization
and innovation is marked by significant advancements and contributions to the national
economy, as well as employment generation.

Contribution to National Economy

Digitization performance is steadily helping the Indian GDP to grow. Along with
economic benefits, the indisputable practicability of the Indian internet economy is also
transforming the social life of the Indians whose benefits are challenging to quantify. It is also
predicted that there is an enormous opportunity to grow the SME sector through e-commerce.
According to a study, a 4.6% contribution of GDP growth is expected to economic benefit in
India by 2020. Due to digitization expected growth in job creation is expected 20-25 lakhs by
2020 in India. As per the study, SMEs are also one of the reasons for generating employment in
the country. Government spending in infrastructure building and capacity building would also
be a source of employment generation. The proposed idea of a digital market would help India
increase output and create jobs. The upcoming new technologies like virtual mirrors and virtual
walls would push Indian e-commerce into the next gear. With already 910 million mobile
subscribers, 58% rural internet users, over 300 million Smartphone sales and growing 4G
subscribers, the Indian economy is all set to jump for ideal digitization. Efficient planning and
directive of digitization would help the Indian economy to compete with the mature economies
in the coming years. Digitalization and innovation in the secondary sector have contributed
significantly to the national economy of India. The adoption of automation, robotics, IoT, and
other digital technologies has led to increased productivity, efficiency, and competitiveness in
the manufacturing and construction industries. This has resulted in higher production levels,
improved product quality, and reduced costs, thereby contributing to the overall growth and
development of the Indian economy.

Employment Generation

In India, increasing internet penetration, rapid technology adoption and high sale of
technical gadgets like smartphones, tablets, etc, have led to an attractive online customer base
and unprecedented growth of Digitization. Digitization is a key economic driver in the present
world it is important to integrate the economy by creating digital markets. Digitalization and
innovation in the secondary sector have also generated employment opportunities in India. While
there have been concerns about potential job displacement due to automation, digitalization has
also created new job roles that require skills in operating and managing digital technologies.

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 Skill development initiatives such as Skill India have played a crucial role in providing
training programs to develop a skilled workforce capable of leveraging digital technologies in
the manufacturing and construction sectors, thereby generating employment opportunities and
promoting inclusive growth. Firms, prices and products are the three benefits derived by an
economy. The use of the Internet in business showed profitability increased by 10% on average
across countries. The Internet-related business contributes 3.2% towards the Indian GDP. The
paper discusses the different countries' digital contributions and the employment created with the
digitization growth. The development of SMEs would be a major source of employment and an
important contributor to Internet business. Finally, the importance of execution and monitoring
of digital growth has also been discussed. The purpose of the paper is to study the impact of
digitization on economic growth and its potential for creating employment opportunities. The
report quotes the Online Labour Index (OLI) to state that India constitutes 24 per cent of the
online labor market share (as of 2017), creating employment opportunities for software
developers, data entry operators, online sales, and creative professionals.

Enhanced Product and Process Innovation

Digitalization has led to innovation in product design, development, and manufacturing

processes in the secondary sector. Computer-aided design and manufacturing (CAD/CAM),
additive manufacturing (3D printing), simulation tools, and other digital technologies have
enabled the development of new products, improved product design, and reduced product
development cycles. Digitalization has also led to the implementation of advanced process
control techniques, real-time process monitoring, and predictive maintenance, resulting in
improved process efficiency, reduced waste, and enhanced product quality. The report mentions

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that the "growing e-commerce industry is creating job opportunities in the logistics sector, along
with the development of new services on the supplier side.

The e-commerce market is also expected to increase at an annual rate of 51 per cent from
Rs 2,484.9 billion in 2017 to Rs 8,526.5 billion in 2020, providing the potential for jobs related
to warehouse management, content developers, and marketing professionals." Digitalization and
innovation have made Indian industries more competitive in the global market. The adoption of
advanced technologies has improved the efficiency and quality of products, reduced lead times,
and enhanced supply chain management, thereby enabling Indian companies to compete with
global counterparts. This has resulted in increased exports, foreign investment, and economic
growth in the secondary sector, contributing to the overall competitiveness of the Indian
economy. Also, aggregator models have emerged with digital marketplaces as the route to
employ India's large army of blue-collar workforce. The report states that "the advent of
technology-enabled aggregator business models in sectors such as cab services, food delivery,
hotel bookings and home service experts has surged new jobs in India".

Improved Supply Chain Management

In India currently, there are over 5.5 crore small business enterprises that boost our GDP
through manufacturing, trading, exporting and importing. As per msme.gov.in, over 15 million
people are employed in this sector per annum, according to a survey conducted by CII. The
majority of these businesses are unorganized or traditional facing a credit crunch and limited
scope of expansion. Digitalization has transformed supply chain management in the secondary
sector in India. Advanced digital technologies such as cloud computing, big data analytics, and
blockchain have enabled real-time tracking and monitoring of goods, streamlined inventory
management, and improved coordination among different stakeholders in the supply chain. This
has resulted in reduced lead times, improved logistics, and enhanced operational efficiency,
contributing to the overall competitiveness and productivity of the secondary sector. The fourth
industrial revolution is creating a disruption that is forcing companies to think about the ways
they are designing their supply chain management. Emerging technologies are replacing the old
and traditional methods. The current state of the secondary sector in India due to digitalization
and innovation is marked by significant contributions to the national economy, employment
generation, increased competitiveness, enhanced product and process innovation, and improved
supply chain management. To ensure these small and traditional businesses continue to lead the
country towards economic growth, there’s an urgent need for the sector to embrace a digital-first
approach that can help businesses reap immediate benefits and prepare for a future in flux.

Statistically speaking, according to a survey report by LocalCircle, 28 per cent of

MSMEs and startups witnessed a growth between 100-500 per cent in their sales through online
channels in the last 12 months. The report summarized that one key to survival through the two
COVID waves for consumer startups and MSMEs has been their ability to digitize themselves
and serve existing customers digitally while finding newer ones to serve. The scaling up of small

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businesses is key to enhancing productivity and achieving inclusive growth. Digitizing a
business introduces new digital technologies to improve processes, functions, and operational
efficiency. Data-driven decisions can reduce human bias and assess the MSME owner's analyse
of various trends and benefit all stakeholders involved. Mm Today tech-based approaches can
also help speed up the loan process and offer information in the vernacular language that can
support a wider range of business owners in tier 2 and tier 3 cities across India, making the
ecosystem more inclusive. However, there is a need to address challenges such as skill
development gaps, ensuring cybersecurity, and managing regulatory complexities to sustain and
further accelerate the positive impact of digitalization and innovation in the secondary sector of
the Indian economy.

Assessing the challenges of digitalization in the secondary sector in India

The digitalization of the secondary sector in India presents both challenges and
opportunities. The government needs to address the challenges while harnessing the
opportunities of digitalization. Skill development, workforce displacement, cybersecurity, and
policy implications are some of the critical issues that need to be addressed. Additionally, the
role of digitalization and innovation in transforming the secondary sector of the Indian economy
has been substantial. It has led to increased automation, IoT adoption, improved supply chain
management, innovation in product and process, skill development, workforce transformation,
cybersecurity, and policy interventions. These changes have resulted in improved operational
efficiency, reduced costs, enhanced product quality, and increased competitiveness in the global
market. However, challenges such as skill development gaps, cybersecurity risks, and regulatory
complexities need to be addressed.

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Skill development

Digitalization requires new skills and competencies from the workforce. Workers in the
secondary sector will need to learn how to use new technologies such as artificial intelligence,
robotics, and the Internet of Things (IoT). There is a need for skill development programs to
prepare the workforce for the new digital age. With the aggressive pace of economic growth,
India is on a fast track to development, powered by innovation and disruption across key sectors,
encouraging government policies, and robust and aggressive growth in IT. Globally, as in India,
the logistics sector is undergoing an unprecedented transformation, fuelled by innovations in IT
and digitization. Despite this, the Indian logistics sector, regarded as the backbone of a healthy
economy, is highly fragmented and unorganised. As a result, the logistics spend in India
currently amounts to 14-15 per cent of the GDP compared to 5-6 of the GDP spent in developed
economies. However, with focused initiatives on manufacturing, like the Make in India
campaign, and a thrust on digitisation with the Digital India campaign, the Indian logistics sector
has slowly begun its disruptive transformation. According to a study by The Associated
Chambers of Commerce and Industry of India (ASSOCHAM), the logistics market in India is
expected to grow to USD 307 billion by the year 2020, recording a CAGR of 16 per cent on
average. Digitalization has necessitated the development of new skills and capabilities in the
workforce. There is a growing demand for skilled workers who can effectively operate and
manage digital technologies in the manufacturing and construction industries. Skill development
has emerged as a critical challenge in the context of digitalization in the secondary sector in
India. The secondary sector, which includes manufacturing and industrial activities, has been
undergoing rapid transformation with the adoption of digital technologies. However, the lack of
a skilled workforce to effectively operate and manage these technologies has become a major
bottleneck in realizing the full potential of digitalization in the secondary sector in India.
According to the India Skills Report 2021, there is a significant skills gap in the manufacturing
sector, with only 47% of the workforce possessing the required skills for their jobs. This gap can
be attributed to the rapid pace of technological advancements, which require workers to
constantly upgrade their skills to keep up with the changing landscape of digital technologies in
the secondary sector. Skill development initiatives such as Skill India have played a crucial role
in providing training programs on digital skills, thereby enhancing the employability of the
workforce and facilitating the transformation of the workforce to adapt to the changing needs of
the digital era.

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Workforce displacement

Workforce displacement, also known as job displacement or job disruption, refers to the
displacement or loss of jobs due to the adoption of digital technologies in the secondary sector.
While digitalization can bring numerous benefits, such as increased efficiency and productivity,
it can also pose challenges in the form of job displacement, particularly in sectors where manual
labour is prevalent. Automation and robotics can replace some manual jobs, leading to the
displacement of workers. The government needs to have policies in place to manage the impact
of digitalization on the workforce. With the advent of automation and other technological
advancements, many routine and manual jobs in the secondary sector are at risk of being
displaced by machines and digital systems. For example, in the manufacturing sector, jobs that
involve repetitive tasks such as assembly line work or machine operation may be replaced by
automated processes. According to a report by the World Economic Forum, it is estimated that
by 2025, automation may lead to the displacement of around 10 million jobs in India. The
digitalization of the secondary sector may disproportionately impact low-skilled and semi-skilled
workers who may lack the necessary skills to adapt to the changing technological landscape.
These workers may face challenges in finding new employment opportunities as their jobs
become obsolete due to automation and digitization. According to a study by the International

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Labour Organization (ILO), nearly 70% of India's workforce is employed in low-skilled or semi-
skilled jobs, which makes them particularly vulnerable to job displacement.

In India, the secondary sector comprises traditional industries such as textiles, garments,
and handicrafts, which may face disruption due to digitalization. These industries often employ a
large workforce of artisans and craftsmen who may lack digital skills. The adoption of digital
technologies may require reskilling or upskilling of these workers to adapt to the changing
demands of the industry. Another challenge to digitalization in the secondary sector in India is
the disparity in digital literacy and access to opportunities. Many workers in the secondary sector
may lack access to digital resources, such as internet connectivity, computers, or smartphones,
which are essential for acquiring digital skills. Additionally, workers from marginalized
communities, rural areas, or with limited education may face barriers to acquiring digital literacy,
further exacerbating the challenge of workforce displacement.

Digital technologies are rapidly evolving, and workers in the secondary sector need to
continuously upgrade their skills to remain relevant in the job market. However, the need for
continuous skill development poses challenges, as it requires access to quality training programs,
resources, and opportunities for lifelong learning. According to a report by McKinsey Global
Institute, up to 375 million workers globally may need to switch occupations or acquire new
skills by 2030 due to automation, including workers in the secondary sector in India.

Cybersecurity

With increased digitalization, cybersecurity has become a critical aspect of the

transformation of the secondary sector in India. Protecting digital assets, data privacy, and
ensuring the security of digital systems and networks have become significant concerns.
Cybersecurity measures such as firewalls, intrusion detection systems, encryption, and
authentication mechanisms have become crucial in safeguarding digital assets and ensuring
secure digital operations in the secondary sector. Digitalization increases the risk of cyber-
attacks on industries. Cybersecurity risks can lead to data breaches, financial losses, and
reputational damage. The government needs to have robust cybersecurity policies and
regulations to protect industries against cyber threats.

The secondary sector generates and processes vast amounts of data, including sensitive
information such as trade secrets, intellectual property, and employee data. Ensuring the privacy
and protection of this data is a significant challenge. Cyber threats, such as data breaches,
ransomware attacks, and insider threats, pose a constant risk to the security of this data,
potentially resulting in financial losses, reputational damage, and legal liabilities. Advanced
Persistent Threats also complicate the process. APTs are sophisticated cyber attacks that target
specific organizations or industries over a prolonged period. The secondary sector in India may
be vulnerable to APTs due to the critical infrastructure and valuable intellectual property

14
involved. APTs can infiltrate networks, steal data, and disrupt operations, causing significant
economic and operational damage.

Many businesses in the secondary sector in India still rely on legacy systems, which may
not have robust security measures in place. These systems are often outdated and may have
vulnerabilities that can be exploited by cyber attackers. Updating and securing legacy systems
can be challenging, as it requires significant investments and may disrupt operations. Employees,
contractors, and other stakeholders in the secondary sector can unintentionally or intentionally
cause cybersecurity breaches. Human factors, such as lack of cybersecurity awareness, weak
passwords, and social engineering attacks, can pose significant challenges to maintaining a
robust cybersecurity posture. India, like many other countries, faces a shortage of skilled
cybersecurity professionals. Finding and retaining qualified cybersecurity talent can be
challenging, especially for small and medium-sized enterprises (SMEs) in the secondary sector.
This talent gap can impact the ability of businesses to effectively manage and respond to
cybersecurity challenges.

The secondary sector in India is also heavily reliant on complex supply chains that
involve multiple vendors, partners, and contractors. Ensuring the cybersecurity of the entire
supply chain is a challenge, as vulnerabilities in one part of the supply chain can potentially
impact the security of the entire ecosystem. Managing the security of third-party vendors and
ensuring their compliance with cybersecurity best practices can be particularly challenging. The
secondary sector in India is subject to various cybersecurity regulations and compliance
requirements, such as the Indian IT Act, GDPR, and industry-specific regulations. Ensuring
compliance with these regulations and implementing necessary cybersecurity measures can be
challenging due to the evolving nature of the threat landscape, the need for regular updates, and
potential gaps in understanding and implementation.

As the secondary sector in India continues to undergo digital transformation,

cybersecurity poses significant challenges due to the large amount of data involved, legacy
systems, complex supply chains, human factors, regulations, and talent gaps. Businesses in the
secondary sector must prioritize cybersecurity and implement robust measures to safeguard their
data, operations, and reputation. This may include investing in cybersecurity technologies,
updating legacy systems, implementing strong security practices, conducting regular employee
training, and complying with relevant regulations and standards to mitigate cybersecurity risks.
Collaboration with industry peers, government agencies, and cybersecurity experts can also help
address these challenges and foster a secure digital environment for the secondary sector in
India.

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Government Policies and Regulatory Frameworks

Government policies and regulatory frameworks have played a crucial role in promoting
digitalization and innovation in the secondary sector. Initiatives such as Digital India, Make in
India, and Skill India have provided the necessary impetus for the adoption of digital
technologies, local manufacturing, and skill development. Government policies and regulatory
frameworks play a crucial role in promoting digitalization in the secondary sector, which
encompasses industries involved in manufacturing, construction, and other industrial activities.
Digitalization refers to the adoption of digital technologies and processes to enhance efficiency,
productivity, and competitiveness in these industries. Regulatory frameworks related to data

16
protection, intellectual property rights, and technology standards have also played a role in
shaping the digital transformation in the secondary sector. Digitalization will require changes in
policies and regulations. The government needs to create a conducive policy environment for
digitalization to thrive. Policies need to be developed to ensure that digitalization benefits all
sectors of the economy.

Governments can provide financial incentives, grants, and funding programs to

encourage businesses in the secondary sector to adopt digital technologies. This can include tax
credits, subsidies, and low-interest loans to support investments in digital infrastructure, such as
automation equipment, robotics, and data analytics tools. These incentives can help offset the
costs of technology adoption and accelerate the pace of digitalization in the secondary sector. It
can establish standards and regulations that mandate or encourage the use of digital technologies
in the secondary sector. For example, regulations may require businesses to use digital systems
for record-keeping, reporting, and compliance purposes. Governments can also set industry
standards for interoperability, data exchange, and cybersecurity to facilitate digitalization efforts
and ensure the reliability and security of digital technologies. Governments can invest in
education and training programs to develop a skilled workforce capable of leveraging digital
technologies in the secondary sector. This can include initiatives such as vocational training,
apprenticeships, and retraining programs to help workers acquire the necessary digital skills to
operate and manage digital technologies in manufacturing and other industrial processes.

Governments have also started to support research and development efforts aimed at
advancing digital technologies in the secondary sector. This can include funding R&D projects,
establishing innovation hubs or centres, and promoting collaborations between industry and
academia. These efforts can help drive technological advancements, foster innovation, and create
new digital solutions that can benefit the secondary sector. Governments can invest in building
and maintaining digital infrastructure, such as high-speed internet connectivity, data centres, and
smart manufacturing facilities, to facilitate the adoption of digital technologies in the secondary
sector. Reliable and affordable digital infrastructure is essential for businesses to access and
leverage digital technologies for improved operational efficiency, supply chain management, and
product innovation. Also, the government can establish regulations and policies related to data
privacy and cybersecurity to create a favourable environment for digitalization in the secondary
sector. Robust data protection and cybersecurity measures can help build trust among businesses
and consumers in the use of digital technologies, ensuring that sensitive information is
safeguarded and minimizing the risk of cyber threats.

The adoption of digital technologies and their effects on productivity, efficiency, and
competitiveness in the Indian economy

The adoption of digital technologies, including automation and robotics, in the Indian
economy has been gaining momentum and has had a significant impact on various sectors,
including manufacturing and construction. Digitalization has spurred innovation in business

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models, allowing companies to offer value-added services and create new revenue streams.
Subscription-based models, servitization, and platform-based approaches are examples of
innovative business models that leverage digital technologies to offer enhanced customer
experiences and generate additional revenue streams. These innovations can provide competitive
advantages and open up new growth opportunities for businesses in the secondary sector.

Digitalization can significantly improve productivity and efficiency in the secondary

sector through automation, robotics, and IoT technologies. Automated processes can reduce
errors, increase precision, and enhance throughput, leading to higher productivity and cost
savings. Real-time data monitoring and analysis through IoT devices can optimize production
processes, reduce downtime, and improve maintenance schedules, further enhancing efficiency.

Robotics and Automation

Robotics involves the use of physical machines, often controlled by software and sensors,
to perform tasks autonomously or with minimal human intervention. In the Indian economy,
robotics has been adopted in various sectors such as manufacturing, logistics, and agriculture.
For example, in manufacturing, robots are used for tasks such as material handling, machine
tending, and packaging, leading to increased efficiency and precision. In logistics, robots are
used for warehouse management, order picking, and last-mile delivery, improving supply chain
operations. In agriculture, robots are used for tasks such as planting, harvesting, and spraying,
enhancing agricultural productivity.

Automation involves the use of computerized systems to perform tasks that were
previously carried out by humans. In the Indian economy, automation has been increasingly
adopted in manufacturing processes to improve efficiency, reduce labour costs, and enhance
product quality. Industrial robots are being used for tasks such as assembling, welding, painting,
and material handling in industries such as automotive, electronics, and textiles. Automation has
helped in reducing human errors, increasing production speed, and improving the accuracy of
operations, resulting in higher productivity and competitiveness.

The adoption of automation and robotics in the Indian economy has brought several
benefits. These include increased productivity and efficiency, improved product quality, reduced
labour costs, and enhanced workplace safety. Automation and robotics have also enabled the use
of data analytics and real-time monitoring, allowing for predictive maintenance and better
decision-making. These technologies have helped Indian companies to improve their
competitiveness, meet market demands, and enhance their global positioning.

The adoption of automation and robotics in the Indian economy also poses challenges.
These include the potential displacement of human workers, the need for reskilling and
upskilling of the workforce, the initial high costs of implementation, and concerns about
cybersecurity and data privacy. There is a need for policies and measures to address these
challenges, including ensuring adequate training and skill development programs, creating a

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supportive regulatory environment, and addressing cybersecurity concerns to ensure responsible
and sustainable adoption of automation and robotics in the Indian economy.

Internet of Things (IoT) and 3D Printing

IoT refers to the interconnection of physical devices through the Internet, enabling them
to collect and exchange data. In the Indian economy, IoT has been adopted in various sectors,
including manufacturing, agriculture, healthcare, transportation, and smart cities. For example, in
manufacturing, IoT enables the use of sensors and data analytics for predictive maintenance,
real-time monitoring of equipment, and supply chain optimization, resulting in improved
operational efficiency and reduced downtime. In agriculture, IoT is used for precision farming,
crop monitoring, and livestock management, leading to increased productivity and resource
optimization. In healthcare, IoT enables remote monitoring of patients, telehealth services, and
smart wearable devices, improving healthcare outcomes. IoT also plays a key role in the
development of smart cities in areas such as smart grids, intelligent transportation systems, and
waste management, leading to improved sustainability and quality of life.

3D printing, also known as additive manufacturing, involves the creation of physical

objects by layering materials based on a digital design. In the Indian economy, 3D printing has
been adopted in various sectors, including manufacturing, aerospace, healthcare, and consumer
goods. 3D printing enables rapid prototyping, customization, and on-demand production,
resulting in reduced lead times, lower costs, and increased product innovation. For example, in
manufacturing, 3D printing is used for rapid prototyping, tooling, and production of complex
components with reduced material waste. In aerospace, 3D printing is used for lightweight and
high-performance components, reducing fuel consumption and emissions. In healthcare, 3D
printing is used for patient-specific implants, prosthetics, and medical devices, leading to
improved patient outcomes and reduced costs.

Government Initiatives

The Indian government has taken various initiatives to promote the adoption of digital
technologies, including automation and robotics. The "Make in India" campaign, which aims to
boost manufacturing in India, has included provisions to encourage the use of automation and
robotics in manufacturing processes. The "Skill India" initiative aims to provide training and
skill development programs to prepare the workforce for the changing demands of the digital
economy, including automation and robotics. The government has also launched programs to
promote research and development in robotics and automation, including the establishment of
research and development centres and funding support for startups in these areas. The Indian
government has taken various initiatives to promote the adoption of digital technologies,
including IoT and 3D printing. The "Digital India" campaign, which aims to transform India into
a digitally empowered society and knowledge economy, includes provisions to promote the
adoption of IoT in various sectors, such as manufacturing, agriculture, and healthcare. The

19
adoption of IoT and 3D printing in the Indian economy has brought several positive effects.
These include increased productivity and efficiency, reduced costs, improved product quality,
and enhanced competitiveness. IoT enables real-time monitoring and optimization of processes,
leading to improved operational efficiency and reduced downtime. It also enables better
decision-making based on data analytics, leading to optimized resource utilization and supply
chain management. 3D printing enables rapid prototyping and customization, reducing lead
times and costs associated with traditional manufacturing processes. It also allows for design
innovation and flexibility in production, leading to improved product quality and enhanced
competitiveness.

The adoption of digital technologies, including automation and robotics, in the Indian
economy has been gaining momentum and has brought significant benefits in terms of increased
productivity, efficiency, and competitiveness. However, some challenges need to be addressed,
including the potential displacement of human workers, the need for reskilling and upskilling,
and cybersecurity concerns. Government initiatives such as "Make in India" and "Skill India"
have been launched to promote the adoption of these technologies and address related
challenges. Responsible and sustainable adoption of automation and robotics in the Indian
economy requires careful consideration of the social, economic, and technological implications,
with a focus on inclusive growth and workforce development. However, the adoption of digital
technologies in the Indian economy also poses many challenges. These include the need for a
skilled workforce and talent, the initial high costs of implementation, concerns about data
security and privacy, and regulatory and legal issues. There is a need for investment in skill
development and training programs to equip the workforce with the necessary skills to
effectively utilize these technologies. The high costs of implementation, including the cost of
sensors, connectivity, and infrastructure, can be a barrier to adoption, especially for small and
medium-sized enterprises (SMEs). Data security and privacy concerns need to be addressed
through robust cybersecurity measures and data protection regulations. Regulatory frameworks
and standards also need to be established to ensure responsible and safe use of these
technologies.

The role of government policies and regulatory frameworks in promoting digitalization in

the secondary sector

The role of government policies and regulatory frameworks is crucial in promoting

digitalization in the secondary sector of the Indian economy. Several initiatives have been
launched by the Indian government to facilitate digitalization, including Digital India, Make in
India, and Skill India. These initiatives aim to create an enabling environment for the adoption of
digital technologies, promote local manufacturing, and skill development to ensure inclusive
growth. Here is an examination of these initiatives and their effectiveness in fostering digital
transformation and inclusive growth:

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Digital India

Launched in 2015, Digital India is a flagship government initiative aimed at transforming

India into a digitally empowered society and knowledge economy. The initiative focuses on
providing digital infrastructure, digital literacy, and digital services to all citizens. Digital India is
a flagship program of the Indian government aimed at transforming the country into a digitally
empowered society and a knowledge economy. It has played a significant role in promoting
digitalization in the secondary sector, which comprises industries involved in the manufacturing
and processing of raw materials. It aims to bridge the digital divide, promote digital inclusion,
and improve governance and service delivery through the use of digital technologies. Digital
India has been successful in promoting digitalization in the secondary sector by driving the
adoption of technologies such as cloud computing, big data analytics, and mobile applications in
various areas such as manufacturing processes, supply chain management, and e-governance. It
has also facilitated the growth of digital startups, innovation, and entrepreneurship in the
secondary sector.

Digital India has focused on improving connectivity in rural and remote areas of India,
which has facilitated the growth of digitalization in the secondary sector. As of September 2021,
the total number of internet subscribers in rural areas in India reached 741.35 million, showing a
significant increase from 296 million in March 2016. This improved connectivity has enabled
industries in the secondary sector to access information, data, and digital services, facilitating
efficient supply chain management, real-time monitoring of operations, and access to global
markets. Digital India has also been instrumental in promoting e-governance initiatives, which
have streamlined processes in the secondary sector. For instance, the implementation of the
Goods and Services Tax (GST) in July 2017, which is a unified tax system aimed at simplifying
the taxation process, has been facilitated through digitalization. As of March 2021, the total
number of registered taxpayers under GST has reached 13.13 million, indicating the successful
adoption of digital platforms for taxation in the secondary sector.

Additionally, Digital India has created an environment conducive to innovation and

entrepreneurship, which has promoted digitalization in the secondary sector. The launch of
initiatives such as Start-up India, Stand-up India, and Atal Innovation Mission has facilitated the
growth of start-ups, including those in the manufacturing and processing industries. As of
September 2021, India has emerged as the world's third-largest start-up ecosystem, with over
60,000 registered start-ups. These start-ups are leveraging digital technologies such as artificial
intelligence, the Internet of Things, and automation to drive innovation and digitalization in the
secondary sector. Moreover, Digital India has focused on enhancing digital literacy and skills
among the workforce in the secondary sector, which has promoted digitalization. The National
Digital Literacy Mission (NDLM) and the Pradhan Mantri Gramin Digital Saksharta Abhiyan
(PMGDISHA) are initiatives that aim to provide digital literacy training to rural and urban
populations. As of September 2021, over 30 million individuals have been trained under these

21
programs, equipping them with the necessary digital skills to participate in the digital economy,
including the secondary sector.

It has promoted digital payments, which have facilitated the growth of digitalization in
the secondary sector. The demonetization drive in November 2016, which aimed at curbing
black money and promoting digital transactions, led to a significant increase in digital payments.
As of March 2021, the total number of digital transactions in India reached 3.41 billion, with a
total value of INR 5,16,524 crores (approximately USD 69 billion). This increased adoption of
digital payments has facilitated transactions in the secondary sector, including procurement of
raw materials, payments to suppliers, and salaries to workers. Digital India has played a
significant role in promoting digitalization in the secondary sector of India's economy. Improved
connectivity, e-governance initiatives, fostering innovation and start-ups, enhancing digital
skills, and encouraging digital payments have collectively contributed to the growth of
digitalization in the secondary sector. The data indicates the successful adoption of digital
technologies, which has resulted in increased efficiency, transparency, and competitiveness in
the manufacturing and processing industries, driving India towards becoming a digitally
empowered nation.

Make in India

Launched in 2014, Make in India is an initiative aimed at promoting local manufacturing

and attracting foreign investment in various sectors, including manufacturing. It aims to make
India a global manufacturing hub and create job opportunities. Make in India has facilitated
digitalization in the secondary sector by promoting investments in digital technologies,
automation, and innovation in manufacturing processes. It has also encouraged the localization
of supply chains and the development of domestic manufacturing capabilities, leading to
increased adoption of digital technologies in the secondary sector. Make in India is an initiative
launched by the Government of India in 2014 to promote manufacturing and economic growth in
the country. One of the key aspects of Make in India is the promotion of digitalization in the
secondary sector, which includes industries such as manufacturing, construction, and
infrastructure. Make in India has been instrumental in promoting local manufacturing in the
secondary sector, which has led to increased adoption of digital technologies. According to data
from the Ministry of Commerce and Industry, the share of manufacturing in India's GDP
increased from 15.1% in 2014 to 17.4% in 2020, showcasing growth in the manufacturing sector.
This growth has been fueled by the Make in India initiative, which has provided incentives and
support to local manufacturers to invest in digital technologies such as automation, robotics, and
IoT (Internet of Things) to improve productivity and efficiency in the manufacturing processes.

Make in India has also focused on fostering innovation and R&D in the secondary sector,
including digital technologies. The initiative has encouraged collaboration between industry and
academia to promote research and innovation in areas such as advanced manufacturing, materials
science, and digital design. As per data from the Ministry of Electronics and Information

22
Technology, India has seen a significant increase in the number of patents filed in areas related
to digitalization, with a growth of over 50% from 2014 to 2020. This reflects the increased focus
on digital technologies in the secondary sector, driven by Make in India. Also emphasized is the
development of digital infrastructure in the secondary sector, including investments in areas such
as broadband connectivity, data centres, and smart manufacturing hubs. The Make in India
initiative has aimed to create an enabling environment for the adoption of digital technologies in
the manufacturing sector. According to data from the Department for Promotion of Industry and
Internal Trade, the government of India has approved 47,000 crores (approximately 6.4 billion
USD) for the development of industrial infrastructure, including digital infrastructure, in the
form of Industrial Corridors and Parks. This has helped in creating a robust digital ecosystem for
the secondary sector, enabling the adoption of digital technologies.

Make in India emphasizes the development of digital infrastructure in the secondary

sector, including investments in areas such as broadband connectivity, data centres, and smart
manufacturing hubs. The initiative has aimed to create an enabling environment for the adoption
of digital technologies in the manufacturing sector. According to data from the Department for
Promotion of Industry and Internal Trade, the government of India has approved 47,000 crores
(approximately 6.4 billion USD) for the development of industrial infrastructure, including
digital infrastructure, in the form of Industrial Corridors and Parks. This has helped in creating a
robust digital ecosystem for the secondary sector, enabling the adoption of digital technologies.
Make in India has also focused on skill development and capacity building in the secondary
sector, including digital skills. The initiative has launched various skill development programs to
provide training and upskilling opportunities to the workforce in the manufacturing sector, with a
specific focus on digital skills such as data analytics, cybersecurity, and artificial intelligence. As
per data from the Ministry of Skill Development and Entrepreneurship, over 7.5 million people
have been trained under various skill development programs related to the manufacturing sector
since the launch of Make in India. This has helped in building a skilled workforce capable of
adopting and utilizing digital technologies in the secondary sector.

Additionally, Make in India has also encouraged the growth of startups and
entrepreneurship in the secondary sector, including digital startups. The initiative has provided
support to startups through various schemes such as Startup India and the Atal Innovation
Mission, which aim to promote innovation, entrepreneurship, and technology-driven enterprises.
According to data from the Ministry of Commerce and Industry, India has seen a significant rise
in the number of startups in the manufacturing and infrastructure sectors, which are leveraging
digital technologies to drive innovation and growth. This reflects the role of Make in India in
promoting a startup ecosystem that is conducive to the adoption of digital technologies in the
secondary sector.

23
Skill India

Launched in 2015, Skill India is an initiative aimed at skilling and upskilling the Indian
workforce to meet the demands of the changing job market, including the digital economy. Skill
India focuses on providing vocational training, entrepreneurship development, and
apprenticeship programs to enhance the employability of the workforce. It has contributed to
promoting digitalization in the secondary sector by providing training programs on digital skills,
such as data analytics, artificial intelligence, and Internet of Things (IoT), to meet the growing
demand for skilled workers in the digital era. There has been significant growth in Foreign Direct
Investment after the launch of this program. The total FDI inflow was approximately USD
222.89 billion between April 2014 and March 2018. In 2017-18, the inflow of FDI was USD
61.96 billion, which is the highest ever recorded amount in a fiscal year. This has led to a surge
in investments concerning automotive and electronics manufacturing. India is ranked at 63 out of
190 countries in the Ease of Doing Business Index according to the recent ‘Doing Business
2020’ Report. The report also mentions that India is one of the economies with the most notable
improvement. In 2018-19, the share of the industrial sector in the Gross Value Added was
29.6%. There was a 6.8% growth in this year. According to the Economic Survey 2019-20, 2019
was a difficult year for the global economy and resultantly, there was only a 2.5% overall growth
in the industrial sector in 2019-20. The India Cellular & Electronics Association (ICEA) in 2018
stated that due to the manufacturing of domestic mobile handsets and components, the country
has saved a whopping INR 3 lakh crore rupees of possible outflow in the last four years. This
money was saved as the domestically manufactured and assembled handsets replaced the import
of completely built units (CBUs). This also provided employment opportunities to approximately
4.5 lakh people. India is ranked 52 out of 129 countries in the Global Innovation Index, 2019
published by the World Intellectual Property Organisation (WIPO), Cornell University and
INSEAD annually. India has moved up 24 places since 2014.

The Ministry of Skill Development and Entrepreneurship’s estimate for the number of
people who needed skills training was more modest – 126.87 million people in 34 sectors across
industries by 2022, its Annual Report 2016-’17 said. Of these, the top 10 sectors would account
for 80% of the total requirement, it was estimated. The 2015 National Policy for Skill
Development and Entrepreneurship issued subsequently estimated the need to skill 402 million
people over the next seven years – to train 104 million fresh entrants and re-skill/up-skill the
existing 298 million farm and non-farm sector workforce. However, the government has been

24
unable to meet its annual targets – set by various ministries and departments – for any but one of
the last five years.

The effectiveness of these initiatives in fostering digital transformation and inclusive

growth in the secondary sector can be seen in the increased adoption of digital technologies,
automation, and innovation in manufacturing processes, improved supply chain management,
and the growth of digital startups and entrepreneurship in the sector. However, there are also
challenges and areas for improvement, such as the need for continued investment in digital
infrastructure and connectivity, addressing skill gaps in the workforce, ensuring data privacy and
security, and streamlining regulatory frameworks to foster innovation while safeguarding
consumer interests. Also, government policies and regulatory frameworks, including initiatives
such as Digital India, Make in India, and Skill India, have played a significant role in promoting
digitalization in the secondary sector of the Indian economy. These initiatives have facilitated the
adoption of digital technologies, promoted local manufacturing, and skill development,
contributing to digital transformation and inclusive growth in the sector. However, ongoing
efforts are needed to address challenges and ensure that the benefits of digitalization are realized
by all stakeholders and that the regulatory frameworks are updated to keep up with the evolving
digital landscape

Conclusion

In conclusion, digitalization and innovation have played a pivotal role in transforming the
secondary sector of the Indian economy. Over the past decade, the adoption of digital
technologies and innovative practices has brought about significant changes in the manufacturing
and construction industries, leading to increased productivity, efficiency, and competitiveness.
The increasing role of digitization in the performance of the Indian economy is contributing to
the growth of the GDP. In addition to economic benefits, the practicality of the Internet economy
in India is also bringing about social transformations, the quantification of which is challenging.
Furthermore, there have been significant opportunities in the SME sector through e-commerce.

One of the key drivers of this transformation has been the widespread adoption of digital
technologies, such as automation, robotics, artificial intelligence, and the Internet of Things
(IoT), which have enabled manufacturers to streamline their operations, optimize their supply
chains, and improve product quality. These technologies have also facilitated the integration of
Indian manufacturers into global value chains, enabling them to compete on a global scale.

Furthermore, innovation has played a crucial role in creating new business models,
products, and services in the secondary sector. Indian manufacturers have been investing in
research and development to develop new technologies, products, and processes that are more
sustainable, energy-efficient, and environmentally friendly. Innovation has also led to the
emergence of start-ups and small and medium-sized enterprises (SMEs) in the manufacturing
and construction sectors, driving entrepreneurship and fostering a culture of innovation. The

25
digitalization and innovation wave in the Indian secondary sector has also contributed to job
creation and skill development. While there have been concerns about the displacement of
workers due to automation, digitalization and innovation have also created new job opportunities
in areas such as data analytics, cybersecurity, and advanced manufacturing. This has necessitated
the development of new skills and capabilities among the workforce, leading to a focus on skill
development and vocational training.

However, some challenges need to be addressed in the process of digitalization and

innovation in the secondary sector. These include issues related to data privacy and security,
regulatory frameworks, infrastructure development, and access to financing for SMEs.
Additionally, there is a need to ensure that the benefits of digitalization and innovation are
inclusive and reach all sections of society, including marginalized communities and rural areas.

In conclusion, digitalization and innovation have been driving forces behind the
transformation of the secondary sector of the Indian economy. Through the adoption of digital
technologies, innovation in products and processes, and skill development, the secondary sector
has become more competitive, sustainable, and inclusive. Going forward, continued investment
in digitalization and innovation, along with supportive policies and infrastructure development,
will be crucial for further transforming the Indian secondary sector and unlocking its full
potential.

26
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