story-banner

An AI boost for India’s MSMEs

author-image

Bhoomika Agarwal

2 reads
author-image

Aman Mishra

2 reads
author-image

Bhoomika Agarwal

2 reads
author-image

Aman Mishra

2 reads

Despite being the mortar that holds India’s economy together, MSMEs tend to be limited by various shortcomings—from human resources to capital. The advent of AI, though, could finally offer them a tool to hold their own against much larger companies.

March 06, 2024

6 MINS READ

Key Takeaways

  • For all their importance to the Indian economy, MSMEs struggle to compete with big businesses owing to their limited access to tech, human resources or capital
  • Artificial intelligence, however, has the potential to be a unique leveller in this decidedly uneven playing field
  • It can provide MSMEs with a competitive edge by helping to simplify their operations, enabling them to enhance productivity, outreach, and scalability
  • MSMEs, though, will find it challenging both financially and technically when it comes to developing AI models independently

Micro, small, and medium enterprises, or MSMEs, are the backbone of the country’s economy. During 2021-22, the share of MSME's Gross Value Added (GVA) in India’s Gross Domestic Product (GDP) was 29.2%. The sector has also been a major source of employment in India, with MSMEs registered between July 2020 and February 2024 employing more than 170 million people,  as per the government’s MSME registration portal, Udyam. 

However, despite their importance to the Indian economy, MSMEs often struggle against larger competitors due to limitations in terms of access to human resources, capital, and advanced technologies. 

Now, as the tentacles of artificial intelligence (AI) continue their endless crawl into every aspect of modern existence, MSMEs finally have a lever they can pull to bridge the gulf that exists between them and large businesses. Indeed, AI could represent a groundbreaking shift in business dynamics, offering unprecedented opportunities for competition, innovation, and growth. 

AI can provide MSMEs with a competitive edge by transforming their business landscape, simplifying current operations, and enabling them to enhance productivity, outreach, and scalability. It can assist them by automating tasks, optimising operations, and providing real-time data-driven insights. Additionally, AI can enable personalised customer experiences, targeted marketing strategies, predictive analytics for cash flow management, and efficient working capital management, further enhancing MSMEs’ ability to compete effectively and thrive in dynamic market environments.

The AI advantage for MSMEs

AI can have several pro-competitive effects for MSMEs, with typical use cases ranging from demand-side management to condition monitoring, predictive maintenance, quality management, production planning, production control, and supply chain management. 

For subscribers only

Premium Reads

>>

View More >>

Deeply reported and objective news on the country´s fastest-growing companies and the people behind them.