If India is to capitalise on its demographic dividend in the face of the risks posed by embodied AI, it will need to embrace the robot revolution. One way to incentivise this might be to encourage the automation of agriculture.

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Toyota’s factory in Woodstock, Ontario, will soon deploy Digit, a humanoid robot from Agility Robotics, on its production floor. These bipedal machines will unload auto parts from warehouse tuggers and onto the production line—work that until now was performed by humans. Toyota chose humanoid robots because its factories are designed for people. By using robots that move like humans, Toyota can automate without redesigning its assembly lines.

On the face of it, this is a small efficiency improvement. But it is a signal of something far larger: the rise of embodied AI and its potential to reshape the global economy. It indicates a future in which countries that build robots will prosper while those that rely on labour supply will struggle.

Just as mechanisation replaced physical labour, artificial intelligence has begun to automate cognitive work. For decades, white-collar jobs were immune to automation. That assumption is collapsing. As AI becomes embedded in machines and gains the ability to interact with the physical world, it will breach the final barrier between software and labour.

Toyota is not the only company using robots. Intuitive Surgical’s da Vinci robots are being used in hospitals around the world and have already completed millions of procedures. Waymo vehicles now complete over 150,000 trips per week, proving that AI-embedded physical systems can operate at scale in unstructured and unpredictable environments. Tesla’s Optimus range of humanoid robots is in production and is projected to scale significantly by the end of the decade.

As interesting as this sounds, rapid automation is likely to have serious repercussions on society, especially in developing economies. A recent paper in Labour Economics argues that the consequences may be so large that normal market adjustments—cheaper labour, lower interest rates or currency depreciation—will not be enough to offset the resulting employment shock. The diffusion of embodied AI could dramatically widen the gap between developing and developed economies.

This could not come at a worse moment for India. With nearly 800 million people under 35, we are experiencing the largest demographic bulge in human history. This youth bulge was supposed to power India’s rise, but if embodied AI is on track to replace labour faster than the economy can absorb it, our demographic dividend could quickly become a demographic disaster.

There may, however, be a way out. Countries that produce robots—rather than import them—should be better placed to ride out the robot revolution. Those that make robots could develop engineering expertise, capture export revenues and build industrial ecosystems that may cushion the labour shock. This suggests that to take advantage of our demographic dividend, we need to actively encourage the manufacture of embodied machines. 

How might we go about doing this? One approach might be to identify domestic use cases for embodied AI to develop natural markets for local robotic solutions. 

Among the many challenges India faces, agricultural productivity is a core concern. With the average size of farm holdings hovering at about a hectare, not only is agriculture in India economically unviable for the most part, it has become a poverty trap that has locked 125 million smallholder families into subsistence living. Of all the problems we most urgently need to solve, finding a path out of this developmental crisis ranks near the top.

Historically, every successful industrial economy has passed through the same transition: labour first moves from farms to factories and then into services. India has, however, struggled to make this transition from farms to factories.

This suggests that if there is one area worth focusing on, it is the use of automation in agriculture to hasten the transition of our economy to industrial production. Since we also need to develop domestic markets for embodied AI, it makes sense to promote companies that embed modern AI technologies in machines designed for use in agricultural settings. If India can become the world’s testbed for agricultural robotics, it could also become a global supplier of those machines.

This is not as far-fetched as it might seem. A Bengaluru startup, Niqo Robotics, has already developed an AI-powered precision sprayer that uses computer vision to identify individual plants and apply agrochemicals with millimetre-level accuracy. By running AI directly on edge devices, the system allows farmers to retrofit existing tractors and use them even in locations with constrained bandwidth, sharply reducing both input costs and environmental damage.

This is just one example of how India could embed AI into farm machines to improve efficiencies. We could see the development of harvest robots designed for crops like cotton, chilli, tomato and onion, which require manual picking and sorting. To raise agricultural productivity, we could look to deploy automated soil-sensing solutions that can dynamically provide farmers customised insights about their land. Thanks to AI-embedded soil moisture sensors, it should be possible to significantly reduce water and pesticide usage on farms.

Every successful economy mechanised its farms before building its factories. We may have to do both at once—and we may have less time than we think.