Insights on How AI is Transforming Indian MSMEs

1. How are MSMEs in India leveraging AI to enhance their competitive edge against larger enterprises and tech giants?

Artificial Intelligence (AI) is emerging as a transformative force, enabling Indian tech MSMEs to enhance competitiveness, drive innovation, and contribute to India’s growth story. By automating processes, analyzing large datasets, and providing precise predictions, AI streamlines operations and empowers better decision-making. Meta-Nasscom sentiment analysis further highlights this trend, with 94% of tech-enabled MSMEs recognizing AI’s potential to drive growth and 87% confident in its ability to boost productivity. Key applications include content creation (48%), customer engagement (46%), and new product development (68%). AI’s role in improving efficiency, reducing inefficiencies, and enhancing profitability makes it a vital tool for business success.

Key Drivers of AI Adoption Across Sectors

2. What are the key factors driving the adoption of AI among MSMEs, and which sectors are witnessing the most significant impact?

MSMEs are the backbone of the Indian economy, contributing significantly to employment and GDP of the country. Small businesses often grapple with significant challenges in scaling operations and staying competitive in a rapidly evolving market. AI presents a game-changing solution, empowering Indian MSMEs to overcome traditional barriers and unlock new opportunities for growth, innovation, and long-term success. In supply chain management, for example, tech-enabled MSMEs are harnessing AI to analyze data patterns and accurately predict inventory needs, helping to prevent overstocking, optimize resources, and reduce operational costs. Similarly, in customer relationship management (CRM), AI-powered chatbots are proving transformative. Many MSMEs have implemented chatbots to efficiently manage customer queries, eliminating the need for large call centers and significantly reducing operational costs.

The retail sector is also greatly benefiting from AI, using it for inventory management, personalized marketing, and improving customer service through chatbots. Other sectors like healthcare are using AI for diagnostic purposes and personalized treatment plans, while the financial sector leverages AI for risk assessment, fraud detection, and providing tailored financial advice. 

3. Has nasscom engaged with policymakers or financial institutions to advocate for grants, subsidies, or other financial support mechanisms to enable AI adoption for MSMEs?

For SMEs to strengthen their competitive positioning, strategic shifts are essential, supported by government policies and initiatives like Nasscom SME Connect. Nasscom's SME Council, established in 2017, supports the growth and innovation of tech SMEs, which make up 80% of its membership, by fostering competitive positioning through strategic initiatives. Its mission includes enabling SMEs to scale and build world-class offerings through market access programs, talent and skilling initiatives, and community development. Key activities include global delegations, business matchmaking, exclusive skilling programs, mentorship through the DISHA program, and flagship events like the Nasscom SME Confluence. The council also provides resources like the CHRO Handbook, SME Inspire Awards, and reports on tech SMEs while driving policy advocacy and ESG programs to ensure sustainable growth and visibility for SME leaders.

Nasscom’s Role in Advancing AI Accessibility for MSMEs

4. What specific measures or partnerships is nasscom planning to enhance the accessibility of AI tools and resources for MSMEs?

In alignment with the vision to foster AI adoption among MSMEs, Nasscom has launched targeted programs such as the SME AI Champions Program. This six-month initiative supports 12 selected SME member organizations on their AI journey through mentorship and guidance from industry experts. Delivered through a blend of group and individual sessions—both online and in-person—the program equips MSMEs with enhanced AI capabilities to drive external market growth, optimize internal operations, and develop strategic AI roadmaps to scale effectively.

Additionally, the SME DISHA Mentorship Workshop on AI provides a one-day, hands-on workshop and mentorship program tailored for tech SMEs. This initiative offers practical guidance to SMEs at different stages of AI adoption—whether exploring AI for the first time or scaling existing capabilities. Participants gain comprehensive insights into AI strategy development, practical tools for real-world application, and personalized mentorship from AI practitioners. These efforts, combined with networking opportunities, empower SMEs to integrate AI into their business strategies and remain competitive in an evolving digital landscape.

Further strengthening accessibility, Nasscom, in collaboration with Meta, launched the ‘AI Enablement for MSMEs’ program across five cities—Gurgaon, Bangalore, Pune, Mumbai, and Hyderabad. This initiative promotes AI awareness and provides hands-on exposure to practical AI tools, showcasing their business applications. Together, these efforts empower SMEs with the resources and expertise needed to embrace AI, ensuring they stay competitive and future-ready in an evolving digital economy.

5. The nasscom-Meta whitepaper study highlights a lack of awareness among MSMEs about available AI tools and resources. What role can the tech industry and larger enterprises play in bridging this gap?

Tech MSMEs face significant challenges in leveraging AI for sustainable business expansion and growth, with key barriers including limited awareness, financial constraints, and a lack of tailored solutions. The Nasscom-Meta study revealed that 65% of MSME respondents struggle due to inadequate knowledge of available tools and resources, while 72% highlighted the need for AI training programs to bridge skill gaps. Financial limitations further hinder adoption, with 59% citing budgetary constraints as a key obstacle. Moreover, 91% of enterprises advocate for more inclusive and affordable AI solutions to democratize access, and 45% emphasize the importance of tailored use cases that demonstrate AI’s industry-specific benefits. 

To address these challenges, a comprehensive MSME-first approach is required including hyperlocal accelerator programs, financial support through grants and subsidies for technical training, and skill development initiatives. Peer learning programs and access to AI tools designed for seamless integration with existing processes are also proposed to lower adoption barriers and enable MSMEs to harness the AI dividend effectively.