India’s small and medium businesses are falling behind in AI adoption, a concern raised at the Bangalore Chamber of Industry and Commerce (BCIC) summit. Even though MSMEs are the foundation of Indian manufacturing, many of them still oppose automation due to cost and complexity arguments.
Leading figures in the sector, such as BCIC President Vineet Verma and specialists from Mitsubishi Electric, highlighted scalable AI solutions. They highlighted how these affordable tools can enhance market responsiveness, job quality, and productivity. Since 90% of India’s industrial facilities fall into this category, they are essential to the nation’s economy. Their slow digital transformation, which accounts for 30% of GDP, is both a national challenge and a lost opportunity.
Why Are MSMEs Falling Behind in AI Adoption?
Indian MSMEs are hesitant to embrace AI due to high costs and a lack of awareness. This is despite its major impact on jobs, exports, and industrial output. India lags behind at less than 25%, while nations like China and Germany boast 35–40% AI adoption in manufacturing. Nonetheless, MSMEs have even lower adoption rates.
Industry experts at the BCIC summit stressed that AI adoption is about transforming traditional operations into intelligent systems. The chairperson of the BCIC manufacturing committee, G. Prakash, emphasized that 48% of India’s exports are from MSMEs. Moreover, they employ over 110 million people.
Nonetheless, the majority still have limited access to digital resources and continue to use outdated systems. Misconceptions about the difficulty and expense of implementation are the root cause of this resistance to change.
Bridging the Gap Through Digital Transformation
Cloud-based AI tools now help SMEs automate tasks, cut costs, and match global benchmarks in smart manufacturing and process efficiency. Experts explained that cloud-based and plug-and-play models now allow MSMEs to unlock productivity gains of 15% to 30%. Additionally, even in small-batch production, these tools facilitate tasks like quality monitoring, energy use optimization, and predictive maintenance.
Kenji Anzari of Mitsubishi Electric India emphasized that AI adoption is foundational for the future of manufacturing. He noted that human-machine collaboration enables devices to respond intelligently to commands and fill data gaps.
According to a PwC India report, embracing AI adoption in the MSME sector could increase India’s GDP by $500 billion by 2025. Thus, by using automation and data-driven insights, small businesses can finally implement smart manufacturing practices that adhere to international standards.
Smart Manufacturing Gives MSMEs a Competitive Edge
MSMEs can better predict demand, control inventory, and expedite delivery times with the aid of smart manufacturing. Furthermore, they help make India’s emerging digital economy more competitive. AI improves demand forecasting, inventory management, and supply chain efficiency, all of which reduce losses and increase competitiveness. Previously exclusive to big businesses, these features are now accessible to even the smallest participants.
Indian MSMEs can now respond to market changes, collaborate with suppliers more efficiently, and ensure on-time delivery thanks to this change. Moreover, it is consistent with India’s efforts to become a global center of manufacturing. Thus, upskilling staff members is another crucial phase in the digital transformation process, according to industry leaders.
Can MSMEs Catch Up in AI Adoption?
MSMEs in India must embrace AI, upskill staff, and pursue smart manufacturing if they want to grow over the long run and remain competitive globally. Therefore, the adoption of AI in the MSME sector must be India’s top priority in order to close the industrial gap.
Furthermore, it will be essential to have upskilling, easily accessible technology, and proactive leadership. Using AI-powered systems is crucial for long-term growth as global competition rises. Thus, the future of Indian industry will depend on how digital transformation is adopted as smart manufacturing grows.
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