Tata Consultancy Services (TCS) has released its Future-Ready Manufacturing: TCS Physical AI Readiness Report 2026, revealing that manufacturers are increasingly shifting from standalone AI automation projects to enterprise-wide Physical AI ecosystems.

The study, based on a survey of 300 manufacturing companies across North America and Europe, found that none of the respondents plan to reduce investments in Physical AI, while 26% intend to increase spending, reflecting strong long-term confidence in AI-led manufacturing transformation.

According to the report, 77% of manufacturers expect the greatest impact from Physical AI in warehouse operations, followed by assembly and manufacturing (75%) and logistics and material movement (72%). The study also found that 42% of manufacturers view Physical AI as a tool to augment the workforce by improving safety and assisting workers in hazardous or repetitive tasks rather than replacing them.

Despite growing interest, 68% of companies remain in the experimental or pilot stage, with legacy system integration, data infrastructure and workforce skills identified as the key challenges to large-scale deployment. The report also highlighted governance gaps, with 44% of respondents lacking clear accountability frameworks for Physical AI failures and 40% unprepared for emerging regulatory requirements.

TCS said it is supporting manufacturers in scaling Physical AI adoption through its Physical AI Gemini Experience Center in Michigan, developed in partnership with Google Cloud, and its Physical AI Blueprint, which integrates robotics, AI, edge intelligence and cloud technologies to enhance manufacturing operations.