When AI shrinks jobs, India must build factories
India stands at a rare threshold in history, one filled with opportunity, urgency, and silent danger.
On one side, the world is tightening immigration. US visas are getting harder. The West is turning inward.
A meaningful share of India’s finest talent – engineers, technologists, researchers – will now stay back, migrate to other countries, or return home.
However, a more silent, digital wall is also rising: AI (Artificial Intelligence).
This creates a paradox India cannot afford to ignore: We may retain our brightest minds, only to have no good jobs to offer them.
And beyond them lies an even larger concern: millions of ordinary graduates, diploma holders, ITI trainees, and rural youth whose employment prospects are even more fragile in an AI-automated world.
If India misses this moment, we risk converting a demographic dividend into a demographic liability.
Job creation: A national stability imperative
In the AI age, unemployment is not merely a welfare issue.
It affects:
- Social stability
- Consumption demand
- Tax revenues
- Political equilibrium
- Internal migration stress
- Youth unrest
Every job lost to automation must be replaced by:
- Manufacturing jobs
- Green economy jobs
- Rural processing jobs
- Defence supply chain jobs
- Deep-tech translation industries
If AI eliminates jobs digitally, India must recreate them physically.
The ‘Startup India’ limitation
‘Startup India’ has been a success in creating unicorns, but unicorns do not employ millions.
Startups are built on high-risk bets and ‘lean’ models that often prioritize automation over labour.
Most of our youth, from IITians to ITIians, are not wired for the ‘cliff-edge’ gamble of solo entrepreneurship.
With limited opportunities, they seek structured, safe pathways.
If we leave job creation only to the ‘brave few,’ we fail the ‘interested & willing many’.
But to create opportunities, we need more entrepreneurs.
In effect, we need an ecosystem that makes entrepreneurial teams out of the risk-averse youth by significantly de-risking the dream and distributing risk among teams.
Over time, we would have inculcated a risk-taking entrepreneurial culture in our youth, very necessary for the world of tomorrow.
‘Incubate India’ to fill the ‘local supply gaps’
Imagine a national platform – an Incubate India Ecosystem – designed not merely to fund hi-fi ideas, but to systematically create all kinds of industries, on scale.
A platform where:
- Engineers, bankers, CAs, technologists, and returning NRIs ideate together
- Like-minded professionals form entrepreneurial teams
- Mentors, audit firms, and bankers help prepare bankable Detailed Project Reports (DPRs)
- Government and private capital pool funds
- Industries – tiny, small, and medium – are launched in clusters
- Market linkages are pre-secured
This is not speculative entrepreneurship.
This is guided industrialization.
The ‘Incubate India’ model I propose here is about filling the physical supply gaps that exist in every sector of MSME products and services, in every district.
For instance, we can incubate industries that turn local waste into national wealth:
- Rural energy: Scaling biogas systems into standardized ‘product forms’ for village clusters.
- Agri-value: Converting cow dung residue into high-grade natural manure and bio-fertilizers.
- Circular economy: Processing temple flower waste into incense (agarbathis) or extracting fibers from old textiles to create new garments.
And we can create small-scale manufacturing of components that India currently imports in bulk.
This is not conventional entrepreneurship; it is guided industrialization.
If we think creatively, the sky should be the limit.
Team entrepreneurship: The risk-mitigation engine
The primary barrier to entrepreneurship in India is the fear of failure.
Instead of a lone founder, the ecosystem can form ‘entrepreneur teams’.
A typical MSME team may consist of:
- A technical person (the maker)
- A finance/ CA professional (the guardian)
- An operations person (the executor)
- A marketing & sales person (the connector)
- A part-time professional to guide (the mentor)
By distributing risk and aggregating diverse skills, a ‘managed risk’ environment is created.
Even if a venture fails, the participants emerge with hands-on experience far superior to any classroom degree.
In this model, failure is not a loss; it is capacity building, human capital formation.
Government sops
The government can extend its schemes to this model.
This could include tax holidays for 5 years, subsidized land for clusters, and ‘Entrepreneurship Apprenticeships’ where the state provides a stipend of ₹5,000 to participants for a year or so.
Registered audit firms can help them run their units honestly and efficiently.
This sector should be shielded from the invasion of cheap imported/ local mass produced goods.
Why AI makes this a national security priority
AI is a labour-substituting revolution.
It will dismantle the ‘entry-level’ job ladder in coding, accounting, and back-office roles, to start with.
When we lose the digital ladder, we must build a physical one.
Every job lost to an algorithm must be replaced by a job in a workshop, a processing plant, or a recycling unit.
Creating industries is no longer just an economic goal; it is a social stability imperative.
Every year we delay, automation moves faster than our ability to employ.
A second industrialization wave
Executed at scale, an Incubate India Ecosystem could:
- Launch thousands of MSMEs
- Deepen manufacturing supply chains
- Reduce imports
- Boost exports
- Create millions of jobs
This would not be incremental growth.
It would be India’s second industrialization wave – decentralized, technology-enabled, and employment-rich.
The cost of inaction
If we do nothing:
- AI will shrink job creation
- Visa tightening will trap talent
- Youth unemployment will rise
- Social pressures will mount
We will then spend exponentially more on:
- Welfare
- Subsidies
- Income support schemes
Creating industries today is cheaper than supporting unemployment tomorrow.
Conclusion: Incubate the industry, not just the idea
India has always incubated talent for the world.
It is time we incubated industries for ourselves.
We have many urban and rural supply gaps to fill, and the talent returning from abroad to lead.
By building a structured, team-based incubation engine, supported by government sops and redirected capital, we can ensure that when AI closes one door, India opens lakhs of factory gates.
The time to act is now.
We must incubate India before AI outpaces employment.
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
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