AI expected to unlock up to 35% in profitability for Indian MSMEs; Nearly 60% to achieve double-digit revenue growth: Report
New Delhi, July 8
The strategic integration of artificial intelligence is projected to unlock an average 30-35 per cent improvement in overall business profitability for Indian micro, small, and medium enterprises, according to a joint report by Google and India SME Forum
Furthermore, the report highlighted that digital adoption helps nearly 60 per cent of Indian MSMEs achieve double-digit revenue growth.
Vidhya Srinivasan, VP / GM, Ads & Commerce, Google, said, "India's digital maturity has unlocked new opportunities for small businesses. Our AI-powered tools have helped millions of small businesses reach new customers on Google and convert real-time consumer interest into growth."
"Looking ahead, agentic AI will actively work on a business' behalf to connect them with ready buyers, predict hyper-local demand shifts, and win new customers at the exact moment of intent," Srinivasan added.
The report noted a major transformation in the commerce ecosystem. It stated that 66 per cent of surveyed MSMEs reported expanded market access, while 58 per cent recorded improved customer acquisition.
Additionally, 78 per cent of these enterprises experienced a notable drop in customer acquisition costs. On the macroeconomic front, digital advertising by MSMEs is associated with approximately Rs 49,700 crore in economy-wide output and Rs 32,300 crore in Gross Value Added (GVA).
In a message read out at the launch, Sushri Shobha Karandlaje, Minister of State for MSME and Labour & Employment, said, "The true depth of our economic progress is found in the aspirations of millions of small-scale enterprises, artisans, and entrepreneurs spanning every corner of India. Technology is reshaping grassroots commerce, allowing a business in any district to command visibility and engage consumers directly."
"This democratization ensures that market exposure is accessible to all, irrespective of geographic location or capital size," the Minister added in her message. "Under the leadership of Hon'ble Prime Minister Shri Narendra Modi, the Ministry of MSME remains committed to improving access to finance and markets, promoting formalisation, strengthening skilling, and encouraging technology adoption through the Udyam ecosystem and a range of schemes and initiatives," she added.
Bharat Khera, Secretary, Ministry of Micro, Small and Medium Enterprises, said that AI acts as a business enabler that will shape the future of enterprise. He noted that the next phase of growth requires quality, innovation, and stronger collaboration among government, industry, financial institutions, and technology partners to build globally competitive enterprises.
Vinod Kumar, President, India SME Forum, stated, "For many small businesses, constraints related to information asymmetries, managerial bandwidth and access to specialised capabilities can limit their ability to scale and compete effectively. The findings of this report suggest that digital adoption and the growing accessibility of artificial intelligence can help narrow some of these structural disadvantages."
— ANI
Reader Comments
The numbers are impressive - 78% drop in customer acquisition costs is huge. But I'm curious about the implementation. Are our MSME owners actually trained to use these AI tools? Many of them still struggle with basic digital payments. We need proper skilling programs alongside these technologies.
Good to see India leading in AI adoption for small businesses. In the US, many SMBs are just starting to explore this. The "agentic AI" concept sounds promising - imagine an AI that automatically finds buyers for your products based on real-time demand. Could be a massive boost for rural artisans.
₹49,700 crore in economic output is no joke. But let's be real - the devil is in the details. How many of these MSMEs have reliable internet connectivity? How many can afford the subscription costs? The government's Udyam ecosystem needs to ensure tier-2 and tier-3 cities aren't left behind in this AI revolution.
As someone who runs a small handmade jewelry business from home, I see the potential. Google's tools have already helped me reach customers in other states. If AI can predict what designs will sell next season, I could plan my inventory better. Just hope the learning curve isn't too steep for people like me.
Interesting report. In Canada, we see similar trends - AI is helping small businesses compete with larger corporations. The key difference here seems to be the scale. India's huge MSME base (over 6 crore businesses) means even small per-business gains add up to massive economic impact. 🇮🇳
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