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AI to Inject $150 Billion into India's Manufacturing MSMEs by 2035: PwC

A new PwC report forecasts that Artificial Intelligence could contribute between USD 135.6 billion and USD 149.9 billion to the growth of manufacturing MSMEs in India as early as 2035. This potential hinges on these enterprises increasing their contribution to manufacturing gross value added to 50%. The report identifies a massive parallel opportunity for MSMEs to supply non-technical products to the AI infrastructure sector, a market valued up to USD 150 billion. By adopting AI for predictive maintenance and quality control, MSMEs can transform into competitive value creators and overcome long-standing productivity constraints.

Key Points: AI to Add $150B to India's MSME Manufacturing by 2035

  • AI to add $135-150B to MSMEs by 2035
  • $100-150B market in non-tech supplies for AI infrastructure
  • Requires MSMEs to raise manufacturing GVA share to 50%
  • AI acts as a Scaler, Enricher, and Reinventor
2 min read

AI integration expected to contribute up to USD 150 billion to manufacturing sector MSMEs by 2035: Report

PwC report projects AI contributing up to $150B to manufacturing MSMEs by 2035, unlocking trillion-dollar growth by 2047 with tech adoption.

"escape the low-productivity trap - PwC Report"

New Delhi, March 8

Artificial Intelligence could contribute between USD 135.6 billion and USD 149.9 billion to the growth of Micro, Small, and Medium Enterprises in the manufacturing sector as early as 2035. This projection, according to a PwC report titled "Unlocking the AI Edge for MSMEs," remains contingent on these enterprises accounting for 50 per cent of the nation's manufacturing value added.

The report indicates that MSMEs stand to unlock growth opportunities in the range of USD 3.13-3.21 trillion by 2047. The way forward for this is if India increases the manufacturing share of GDP to 25 per cent and MSMEs raise their contribution to manufacturing gross value added (GVA) from 35.4 per cent in FY 2023-24 to 50 per cent.

Achieving this "exponential 19x leap in value creation" requires MSMEs to adopt AI on shop floors and leverage the technology to become active partners across global value chains.

Beyond direct production, a significant demand-side opportunity exists for MSMEs to supply non-technical manufacturing products to AI infrastructure and chip manufacturers. The report identifies a market for "harnesses, chambers, cooling equipment, and other non-technical manufacturing products" valued between USD 100 billion and USD 150 billion.

With AI expected to contribute USD 1.7 trillion to the overall economy by 2035, the investment required for AI infrastructure is estimated at USD 500 billion.

The report notes that "non-tech-intensive capital goods account for 20-30% of capex on such projects," which is a sector where MSMEs maintain an active presence. By reducing capability barriers across design, quality, and decision-making, AI allows these firms to "leapfrog structural and operational constraints" and "escape the low-productivity trap."

Technological integration enables MSMEs to reposition themselves as "competitive value creators rather than cost-based suppliers." Specific applications include predictive maintenance, vision-led quality control, and intelligent inventory management. Furthermore, AI combined with local language models simplifies interfaces and reduces the need for technical expertise.

The report defines AI's role through three functions: a "Scaler" that decreases processing times, an "Enricher" that augments human decision-making, and a "Reinventor" that transforms how value is captured.

To manage this transition, the study proposes a "3A2I framework" built around "access, acceptance, assimilation, implementation, and institutionalisation" to help firms translate adoption into measurable value.

- ANI

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Reader Comments

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Priya S
The potential is huge, but the report's condition of MSMEs raising their contribution to 50% of manufacturing GVA is a massive ask. We need more than just reports; we need practical, affordable AI solutions tailored for small factories in tier-2 and tier-3 cities. The local language model point is crucial for wider adoption.
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Rohit P
$150 billion! That's a staggering number. If even half of this comes true, it can transform our manufacturing landscape and create so many jobs. The part about supplying non-technical products to chip makers is a golden opportunity many small businesses haven't even considered. Time to upskill!
S
Sarah B
While the projections are optimistic, we must be cautious. The report itself says it's contingent on several big "ifs". The $500 billion infrastructure investment is a huge hurdle. MSMEs will need significant hand-holding and financial support to be part of this AI revolution, not just lofty targets.
K
Karthik V
"Escape the low-productivity trap" – this phrase hits home. Many small manufacturers are stuck in old ways due to lack of knowledge. AI as a "Scaler" and "Enricher" can be a game-changer. Hope the proposed 3A2I framework is made available in simple workshops across industrial clusters.
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Meera T
Fantastic vision for 2047! Moving from cost-based suppliers to value creators is the dream for every Indian MSME. The focus should now be on creating a robust ecosystem – affordable tech, digital literacy, and easier access to capital. The journey of a thousand miles begins with a single step. Let's get started!

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