CHENNAI: India should aim to create two million high-value jobs in the Extended Reality (XR) sector by 2030 and move beyond its traditional role as a service provider if it hopes to emerge as a global leader in immersive technologies, according to a new report by researchers at IIT Madras.
The report, Bolstering India's XR Startup and Innovation Ecosystem: A Case Study of the TN AVGC-XR Policy 2026, analyses Tamil Nadu's recently announced AVGC-XR Policy and outlines measures that could strengthen both the state's and the country's position in the rapidly expanding XR ecosystem.
Extended Reality, which includes Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR), is increasingly finding applications across healthcare, manufacturing, defence, education and entertainment. According to the report, India already has more than 1,000 XR startups and over 1,000 small and medium enterprises operating in the sector.
While the report welcomes Tamil Nadu's goal of capturing 20% of India's XR market and generating 200,000 service-oriented jobs, it cautions that relying predominantly on service delivery could restrict long-term value creation and international competitiveness.
One of its key recommendations is the adoption of a "50-50 workforce design principle", under which at least half of the projected two million XR jobs should be concentrated in high-value domains such as original intellectual property creation, game engine development, AI-driven immersive technologies and advanced research and development.
The report also adds that XR hardware manufacturing should be treated as a strategic sector. Researchers have recommended leveraging Tamil Nadu's existing electronics manufacturing ecosystem to develop indigenous capabilities in head-mounted displays, trackers and haptic interfaces, reducing dependence on imports while strengthening India's position in the global XR hardware value chain.
Highlighting the infrastructure requirements needed to support the sector, Prof M Manivannan, Faculty Head of the Experiential Technology Innovation Centre (XTIC), proposed the creation of a dedicated state-level computing infrastructure.
"We propose the creation of a State-level compute infrastructure such as a 'TN-XR Cloud', which would provide subsidised access to high-end Graphics Processing Units (GPUs) for startups, researchers and academic institutions working on compute-intensive AI and XR applications," he said.
The report says that the rise of artificial intelligence could accelerate the adoption of XR technologies in the coming years.
"As a natural extension to the current AI wave, XR Wave is imminent, which is also called Physical AI and Embodied AI," Prof Manivannan said.
Researchers also identified a skills and education gap that could hamper growth if left unaddressed. The report recommends making academic institutions a central pillar of the XR ecosystem through curriculum reforms, specialised fellowships and research support in areas such as haptics, spatial computing and sensor integration.
"We have also identified major Education Gap within the sector and have recommended making academia the anchor of the XR innovation ecosystem," Prof Manivannan added.
Beyond economic growth, the report highlights several practical applications of XR technologies. These include remote medical assistance in underserved regions, immersive educational tools, industrial training systems and digital twin technologies for manufacturing. According to the report, such technologies could reduce medical errors in rural clinics through remote diagnostics and significantly shorten the time required to acquire new professional skills.
The study also points to policy gaps that policymakers will need to address as the sector expands. These include the absence of dedicated frameworks governing AI-generated XR assets, immersive virtual environments, metaverse governance and child safety standards.
The report further recommends the establishment of an integrated XR corridor bringing together innovation centres, skill development hubs and manufacturing clusters into a coordinated ecosystem capable of supporting long-term growth and technology leadership.
