At a recent summit convened by the Bangalore Chamber of Industry and Commerce (BCIC), industry experts conveyed a pressing message: while artificial intelligence (AI) holds immense potential for transformation in India’s small and medium-sized enterprises (SMEs) and micro, small, and medium enterprises (MSMEs), its adoption still lags significantly. The summit focused on harnessing AI to boost productivity and efficiency across industries, asserting that AI should be embraced as an opportunity rather than a disruption.
India’s manufacturing sector is predominantly composed of MSMEs, which account for over 90% of all industrial enterprises. As G Prakash, chairperson of the manufacturing expert committee at BCIC, pointed out, these enterprises contribute approximately 30% to India’s GDP and employ around 110 million individuals, making their role in the economy critical. However, many MSMEs are yet to integrate digital technologies, viewing them as prohibitively complex and expensive. Prakash highlighted that affordable, cloud-based AI solutions can significantly enhance productivity—potentially by as much as 30%—by enabling predictive maintenance and optimising quality control and energy consumption, even in smaller production settings.
Despite the promising avenues presented by AI, the uptake among MSMEs remains stunted. Various reports indicate that common barriers include limited awareness, financial constraints, and a lack of tailored AI solutions suitable for smaller businesses. According to one report from PwC India, effective AI adoption in MSMEs could elevate India’s GDP by a staggering $500 billion by 2025, underscoring the technology’s potential as one of the most transformative innovations for the country.
While there is recognition of AI’s ability to drive growth—94% of tech-enabled MSMEs acknowledge its benefits—challenges persist. Many enterprises struggle with high implementation costs, uncertainty regarding return on investment (ROI), and insufficient technical expertise. A study by Nasscom highlighted that a significant number of MSME respondents reported inadequate knowledge of available AI tools, with 65% citing a lack of understanding as a major obstacle to integration.
Industry experts advocate for a multi-faceted approach to bridge this gap, suggesting that robust training programs, accessible financial resources, and a concerted effort to develop an AI-ready workforce are essential. Upskilling programmes tailored to MSMEs could help cultivate necessary digital skills, enabling these businesses to exploit AI’s full potential. Initiatives such as the National AI Training Program and partnerships with organisations like Meta and Nasscom aim to provide essential training and resources, fostering an ecosystem more conducive to AI integration.
Sustainable growth through AI also involves an emphasis on smart supply chain management, which can streamline operations and enhance responsiveness to market fluctuations. By adopting AI for tasks such as demand forecasting and inventory optimisation, MSMEs can significantly reduce costs associated with excess inventory and stockouts.
The path forward is clear yet challenging: while AI offers substantial opportunities for India’s MSMEs, substantial barriers remain. Addressing these issues through coordinated efforts involving government support, industry partnerships, and accessible AI resources will be vital in realising the transformative potential of AI in this crucial segment of the economy.
Source: Noah Wire Services
