AI to Unlock 30-35% Profitability Gains for Indian MSMEs
The strategic integration of artificial intelligence is projected to unlock an average 30-35% improvement in overall business profitability for Indian micro, small, and medium enterprises (MSMEs), according to a joint report by Google and the India SME Forum. The report also highlights that digital adoption helps nearly 60% of Indian MSMEs achieve double-digit revenue growth.
Key Findings on Digital Adoption and Market Access
The report notes a major transformation in the commerce ecosystem. It states that 66% of surveyed MSMEs reported expanded market access, while 58% recorded improved customer acquisition. Additionally, 78% of these enterprises experienced a notable drop in customer acquisition costs.
AI-Powered Tools Driving Growth
Vidhya Srinivasan, VP/GM of Ads & Commerce at 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." She added, "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."
Macroeconomic Impact of Digital Advertising
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).
Government Support and Vision
In a message read 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." She added, "This democratization ensures that market exposure is accessible to all, irrespective of geographic location or capital size." The Minister also noted the government's commitment to improving access to finance and markets, promoting formalization, strengthening skilling, and encouraging technology adoption through the Udyam ecosystem and various schemes.
AI as a Business Enabler
Bharat Khera, Secretary of the 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.
Overcoming Structural Disadvantages
Vinod Kumar, President of the 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."
