India’s small-business procurement market is emerging as one of the country’s most promising battlegrounds for digital platforms, with a new industry study estimating annual MSME spending at ₹124.9 trillion and finding that four in five firms expect online sourcing to support growth within the next three years.
The report, Digital Bharat: India Digital Procurement Report 2026, was launched by the India SME Forum and is based on its proprietary procurement model using offi...
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cial Udyam registration data, alongside a large survey of India’s 515.3 lakh registered micro, small and medium enterprises. It suggests that although digital buying has advanced quickly, a substantial share of procurement remains offline, leaving room for marketplaces to deepen their reach.
Price transparency and supplier quality were among the strongest perceived advantages of digital platforms, with Amazon Business topping those categories in the survey. Moglix led in industrial procurement and embedded finance, underscoring how different platforms are carving out niches in a fragmented market. The report also pointed to a wide competitive field that includes Meesho, OfBusiness, Udaan, Flipkart Business, IndustryBuying, IndiaMART and Jumbotail, each serving distinct procurement needs across the MSME spectrum.
The findings were unveiled in New Delhi by Shobha Karandlaje, minister of state for MSMEs and labour and employment, who said digital procurement should evolve from a routine administrative task into a strategic capability. She argued that wider adoption could help smaller firms improve efficiency, cut costs, reach more markets and strengthen supply chains.
Industry and policy leaders at the launch described the scale of the opportunity as significant, but also incomplete. According to the report, more than three-quarters of surveyed firms spend between ₹10 lakh and ₹1 crore a month on procurement, yet only 30-40 per cent of that outlay currently passes through digital channels. That gap, the study said, signals both the scale of the market and the still limited depth of digital penetration.
The barriers MSMEs face remain familiar. Price volatility was cited as the biggest challenge by 55.7 per cent of respondents, followed by juggling multiple suppliers, payment and credit constraints, and the absence of a single dependable vendor. When choosing a platform, firms placed the highest value on flexible payment and credit options, GST-compliant invoicing, broader product ranges, straightforward ordering and faster delivery.
A further sign of the sector’s continuing dependence on traditional decision-making is that 64.5 per cent of procurement choices are still made directly by business owners. That, the report suggests, means digital tools must be simple, intuitive and suited to small firms that may not operate with the procurement systems used by larger corporates.
The report said 80.4 per cent of enterprises expect digital procurement to play a major role in business expansion over the next three years. It also found that 68.7 per cent plan to source raw materials online in future, while 61.3 per cent expect to procure machinery and equipment digitally.
Vinod Kumar, president of the India SME Forum, said the market is moving beyond sporadic online buying towards more integrated, data-led procurement, but that progress will require collaboration between businesses, platform providers and policymakers.
The policy backdrop is also shifting. Ateesh Kumar Singh, additional secretary in the Department for Promotion of Industry and Internal Trade, said existing measures such as MSME procurement mandates, quality- and cost-based selection, procurement relaxations, Make in India preferences and startup-friendly rules have created a base for reform. He added, however, that weak enforcement, restrictive eligibility conditions and uneven adoption continue to blunt their effect, and called for broader changes to modernise public procurement.
The report’s conclusions come as digital procurement is already proving its value in public buying. The Government e-Marketplace has reported cumulative gross merchandise value of ₹18.4 lakh crore since its launch in 2016, while government-backed data indicate that MSMEs account for a large share of orders and value on the platform, well above the mandatory procurement threshold. That experience has helped normalise digital purchasing for many smaller firms and may be reinforcing expectations that the same model can spread further across private-sector procurement.
Taken together, the evidence points to a market that is large, still under-digitised and increasingly contested. For procurement platforms, the challenge is no longer proving that MSMEs will use digital tools, but persuading them to rely on them for the full range of business buying.
Source: Noah Wire Services
