AI to Inject $150 Billion into India's MSME Manufacturing by 2035

According to the joint report by PwC India and the Observer Research Foundation (ORF), if India succeeds in increasing manufacturing's share of GDP to 25 per cent, and MSMEs raise their contribution to India's manufacturing from 35.4 per cent in FY 2023-24 to 50 per cent by 2047, they stand to unlock growth opportunities in the range of $3.13-$3.21 trillion by 2047.

"AI is no longer the preserve of large enterprises. Deployed as a co‑pilot - not a replacement - it can help MSMEs break out of the low‑productivity trap and compete on quality, speed, and innovation, while strengthening jobs and supply‑chain resilience," said Sanjeev Krishan, Chairperson, PwC in India.

"We are keen to advance thought leadership that underscores a human‑centric, ecosystem‑led approach - one that makes AI accessible, affordable, and actionable for businesses of every size. Used as an enabler of people and productivity, AI can help MSMEs leapfrog structural constraints and integrate more meaningfully into global value chains" he added.

The report highlights AI's potential to transform MSMEs across the manufacturing value chain - from predictive maintenance, energy optimisation, and vision‑based quality control on shopfloors, to AI‑enabled credit assessment, multilingual customer engagement, compliance automation, and generative design.

By lowering capability barriers and reducing the cost of scale, AI can help small firms improve consistency, meet global standards, and expand output faster.

With large investments expected in data centres and semiconductor ecosystems, MSMEs could participate by supplying non‑tech‑intensive capital goods such as harnesses, cooling equipment, and industrial components - opening a $100-$150 billion manufacturing opportunity over time.

"India's AI moment will be defined not by frontier breakthroughs alone, but by how deeply and equitably AI diffuses across its industrial economy. MSMEs sit at the heart of this transformation. Our work with PwC India offers a pragmatic, bottom‑up roadmap that aligns policy, industry, and civil society to ensure AI adoption strengthens competitiveness, preserves employment, and advances inclusive growth," said Samir Saran, President, ORF.

- IANS