As India progresses towards its ambition of becoming a $10 trillion economy by 2035, a profound transformation is reshaping its labour market. Automation—once confined to manufacturing assembly lines—has evolved into an immediate reality touching nearly every sector. The implications are stark: demand for lower and medium-skill roles is set to decline dramatically, creating both unprecedented challenges and opportunities for the world’s most populous nation.
The global surge
Globally, automation’s pace has surpassed even aggressive predictions. Sophisticated algorithms now manage customer service, artificial intelligence creates content, and autonomous systems handle logistics. McKinsey’s latest research suggests approximately 30 per cent of work hours globally could be automated by 2030, with middle-skill, routine-heavy positions most vulnerable.
The US has seen a 12 per cent decline in routine cognitive roles over the past decade, and similar trends are evident across Europe and East Asia. Jobs such as retail cashiers, data entry clerks, and bank tellers—once reliable pathways to middle-class stability—are disappearing.
The COVID-19 pandemic acted as a catalyst. Faced with labour shortages, companies invested heavily in automation rather than wait for workers to return. Fast-food chains replaced cashiers with kiosks, hotels implemented contactless check-in, and call centres deployed conversational AI. What might have taken a decade occurred in two years.
Yet the global story isn’t uniformly bleak.
Lessons from the global stage
Germany’s dual education system, combining classroom learning with apprenticeships, has proven remarkably adaptable to technological change.
Singapore’s SkillsFuture programme offers substantial credits for citizens to continuously upgrade their skills throughout their careers.
Denmark’s “flexicurity” model combines flexible hiring with robust social safety nets and aggressive retraining programmes.
India’s distinct challenge
For India, however, automation presents a particularly complex dilemma. Unlike Western economies that automated after achieving high levels of industrialisation, India faces what economists call “premature deindustrialisation”—losing manufacturing jobs before the sector reaches its full potential.
India’s IT services sector, which elevated millions to middle-class status, confronts substantial automation pressure. Basic coding, testing, and support functions—once entry points for countless engineering graduates—are increasingly handled by AI tools. According to NASSCOM, up to 40% of India’s 4.5 million IT workers will require significant reskilling within five years.
Manufacturing, often viewed as India’s great hope for job creation, is becoming less labour-intensive precisely when needed most. Modern factories in Gujarat and Tamil Nadu produce more with fewer workers, utilising advanced robotics, IoT sensors, and automated quality control.
The business process outsourcing industry faces existential challenges from AI-powered voice recognition and natural language processing. What once required dozens of customer service representatives can now be handled by sophisticated conversational agents.
Even agriculture, still employing nearly 40 per cent of India’s workforce, faces automation pressure through precision farming, automated irrigation, and harvesting robots—reducing manual labour whilst increasing productivity.
Perhaps most concerning is how automation widens India’s already substantial inequalities. Urban centres such as Bengaluru, Hyderabad, and Pune—with their concentrations of high-skill workers—thrive despite automation. Engineers designing AI systems command ever-higher salaries, whilst those whose jobs these systems replace face diminishing prospects.
Geographic disparities are equally stark. States with robust educational systems and digital infrastructure—Karnataka, Maharashtra, Tamil Nadu—are better positioned to adapt than those such as Bihar and Uttar Pradesh, where basic literacy and digital access remain challenges.
India’s demographic dividend, long considered its great economic advantage, risks becoming a liability if millions of young workers find themselves trained for jobs that no longer exist. With 10-12 million Indians entering the workforce annually, automating lower and medium-skill roles threatens to create a generation of underemployed youth.
Lessons from the global stage contd…
International responses to automation provide valuable insights.
Denmark combines flexible hiring practices with robust safety nets, offering displaced workers up to two years of unemployment benefits while they undergo retraining.
South Korea has focused on creating industries around emerging technologies, investing heavily in robotics, green energy, and biotechnology to generate new job opportunities.
Estonia has prioritised universal digital education, enabling its citizens to adapt to technological changes despite limited natural resources.
Addressing automation’s challenge requires a multifaceted approach acknowledging India’s unique circumstances.
First, the education system needs transformation. Rote learning that dominates Indian education prepared workers for predictable, procedure-driven jobs now most vulnerable to automation. Future-proof skills—critical thinking, creative problem-solving, adaptation, and emotional intelligence—must become educational priorities. Industrial training institutes and polytechnics need complete overhauls to align with emerging industry needs.
Second, targeted safety nets are essential. Unlike Western countries, India lacks fiscal capacity for universal basic income or extensive unemployment benefits. However, targeted interventions for vulnerable sectors and expanded rural employment programmes could provide transitional support for displaced workers.
Third, India must leverage its strengths. The massive domestic market creates opportunities for service roles resistant to automation—particularly those requiring cultural context, empathy, and interpersonal skills. Linguistic diversity positions India well for higher-value language services that AI still struggles with.
Fourth, labour regulations need reimagining. Laws designed for an industrial economy inadequately address modern work’s fluid nature. Forward-thinking policies around gig work, remote employment, and flexible arrangements could create new opportunities as traditional roles decline.
Fifth, focus must shift to the rural economy. India cannot simply copy urban-focused automation responses from predominantly urban countries. Rural innovation hubs, digital agriculture initiatives, and village-based digital service centres could create new economic pathways as traditional agricultural employment declines.
The automation of lower and medium-skill roles isn’t merely an economic challenge—it’s a societal inflection point. Technology has always displaced certain jobs whilst creating others. However, the current wave differs in both pace and scope, threatening to outstrip adaptive capacity.
For India, the ultimate question isn’t whether automation will eliminate jobs—it will. The real question is whether enough new opportunities can be generated and whether the workforce can be prepared to seize them. The demographic dividend only translates to growth if young Indians have productive work utilising their capabilities.
As policymakers, business leaders, and citizens face this challenge, the choice is clear: allow automation to widen already substantial inequalities, or harness technological change to create a more inclusive economy. The former path leads to social instability; the latter to sustainable prosperity.
The time for gradual adjustment has passed. Bold, coordinated action across government, industry, and education is needed to navigate this transition. Other countries face similar challenges, but few confront automation with India’s unique combination of scale, diversity, and development needs.
India’s response to automation won’t just determine its economic trajectory—it will establish a model for developing economies worldwide. The question isn’t whether lower and medium-skill roles will decline; it’s what will be built in their place.