MSMEs Fast-Track AI and Digital Automation: India SME Forum
Indian micro, small and medium enterprises (MSMEs) are increasingly embracing technology-driven business models, with software automation, digital tools and artificial intelligence (AI) emerging as key drivers of competitiveness and productivity, according to a nationwide survey conducted by India SME Forum (ISF).
The survey, which covered over 18,900 manufacturing enterprises and 26,820 service-sector SMEs across the country, reveals a significant acceleration in the adoption of digital technologies, driven by rising market competition, compliance requirements, digital commerce opportunities and the growing need for operational efficiency.
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"Indian MSMEs are steadily transitioning toward technology-driven business models. Digital and software automation is becoming essential for competitiveness, while AI and affordable hardware automation will define the next phase of MSME growth and productivity," says Vinod Kumar, President, India SME Forum.
The survey also highlights growing interest in artificial intelligence among MSMEs. While AI adoption remains at a relatively early stage, enterprises are increasingly exploring AI-powered customer support, sales forecasting, inventory optimisation, content creation and workflow automation. Industry observers believe that the falling cost of AI tools and increasing accessibility of cloud-based applications are likely to accelerate adoption among smaller businesses over the next few years.
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According to India SME Forum, AI has the potential to bridge productivity gaps, particularly for resource-constrained enterprises that may not have access to large workforces or sophisticated management systems.
The survey findings indicate that software-led automation has witnessed significantly higher adoption compared to hardware automation. Industry experts attribute this trend to lower implementation costs, ease of deployment and the widespread availability of cloud-based solutions.
Businesses are increasingly adopting digital accounting systems, inventory management software, customer relationship management (CRM) platforms, payroll applications and e-commerce management tools to streamline operations and improve decision-making.
The findings suggest that MSMEs now view technology not merely as a support function but as a strategic business enabler capable of improving profitability, compliance management and customer engagement.
Manufacturing MSMEs are increasingly investing in digital monitoring systems, production planning software and machine-performance analytics to improve operational efficiency. The survey suggests that the convergence of software automation, AI and affordable industrial technologies could significantly enhance competitiveness among Indian manufacturers, particularly those participating in global supply chains.
At the same time, the rapid growth of e-commerce, social commerce and digital marketplaces has pushed businesses to invest in digital infrastructure to reach customers beyond their traditional geographic markets.
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With more than seven crore registered MSMEs contributing nearly 30 percent of India's GDP and about 45 percent of exports, technology adoption is increasingly being viewed as a prerequisite for growth rather than an optional investment.
The findings suggest that India's MSME sector is no longer merely digitising – it is steadily moving towards intelligent, technology-enabled business operations.