AI could prove to be one of the most game-changing technologies propelling growth for India’s micro, small and medium enterprises (MSMEs). To empower MSMEs to further leverage the strength of AI, we launched a white paper with the National Association of Software and Service Companies (nasscom), an Indian non-governmental apex trade association and advocacy group for the Indian technology industry.

The findings show both the opportunities and the challenges faced by tech-enabled* MSMEs in adoption of AI in their business operations.

“As the backbone of the Indian economy, empowering MSMEs with cutting edge business solutions is pivotal for the growth of the country. With its massive developer base and the third largest startup ecosystem in the world, India is going to be a driving force in the global AI revolution. Meta has been committed to creating an ecosystem for MSMEs to thrive, and our joint efforts with nasscom focus on equipping MSMEs with the necessary tools and knowledge to unlock the full potential of AI.” – Sandhya Devanathan, Vice President (India) at Meta

Aimed at promoting AI awareness and capacity building for MSMEs and catalyzing adoption of AI technologies to improve productivity and business growth, earlier this year, we launched an ‘AI Enablement for MSMEs’, a program with nasscom for tech-enabled MSMEs in the country. 

The program was held across five cities – Gurugram, Bangalore, Pune, Mumbai and Hyderabad – which saw more than 300 MSMEs attend based on whose inputs the white paper was crafted. A comprehensive sentiment analysis of the tech-enabled MSMEs was done to assess their level of awareness, and approach towards AI technologies. The analysis revealed a strong belief in the potential of AI among tech-enabled MSMEs where 94% of them acknowledged its ability to drive business growth and 87% of respondents were confident in its capacity to improve overall productivity.

“MSMEs, pivotal to India’s economic engine, are at a critical point in today’s fast-evolving tech landscape. Integrating AI offers them a unique chance for unprecedented growth, increased productivity, and sustainable innovation. Ecosystem collaboration, coupled with access to user-friendly tools and resources, is essential for tech-enabled MSMEs to harness AI’s full potential and for India to maximize its AI dividends.” – Sangeeta Gupta, Senior Vice President and Chief Strategy Officer at nasscom

Business and Management Consulting firm, Primus Partners, were the knowledge partner for the white paper.

“We were amazed to experience first hand how aware MSMEs are of the power of AI. However, the study also uncovered a key impediment for the MSMEs to operationalize their knowledge;  lack of awareness of tools and resources to enable their AI journey was identified as a major challenge by 65% of these businesses.” – Nilaya Varma, CEO Primus Partners,

Key insights from the white paper titled, ‘Empowering India’s Growth: Unlocking AI’s Potential for Tech-Enabled MSMEs’

• Belief in AI: The analysis revealed a strong belief in the potential of AI among tech-enabled MSMEs where 94% of them acknowledged its ability to drive business growth and 87% of respondents were confident in its capacity to improve overall productivity.
• AI for business growth: With productivity being a cornerstone of business success, the white paper calls out AI as a transformative tool in streamlining processes, reducing operational inefficiencies, enhancing output quality, and maximizing profitability. Specifically, 48% of respondents support AI’s potential in content creation and marketing, and 46% in customer engagement, followed by 68% in developing new products and services. 
• Lack of awareness about AI tools: The paper called out an awareness gap with 65% of tech MSMEs struggling due to the limited awareness about available tools and resources.
• Need for skilling and easy access to AI tools: 72% emphasized the necessity for AI training programs underlining the importance of skill development in facilitating adoption. An overwhelming 91% of these enterprises advocate for making AI technologies more democratically accessible, emphasizing the need for more inclusive and affordable AI solutions to level the playing field for smaller businesses. 
• Financial constraints: Additionally, financial constraints significantly hinder tech-enabled MSMEs from adopting AI technologies, with 59% of surveyed enterprises citing budgetary limitations as a barrier to investing in necessary tools and resources. 
• Real examples for inspiration: Further, nearly half (45%) of the surveyed enterprises highlighted the need for tailored use cases demonstrating AI’s benefits across specific industries.

To address these and other challenges, the white paper recommends an MSME-first approach to help them reap the AI Dividend. The approach includes comprehensive actions to be taken by the industry and ecosystem. These actions include, among others, the creation of hyperlocal accelerator programs for tech-enabled MSMEs, financial support including grants and subsidies for technical training, skill development, peer learning programs and access to tools and resources that prioritize ease of implementation and integration with existing business processes thereby reducing the technical barriers for adoption.

The full report can be found here.

*For the purpose of this paper, tech-enabled MSMEs are defined as either those that are into technology related business or are leveraging technology to build and grow their business.