MSMEs & AI: Potential vs. Reality | Report

New Delhi, Jun 27 (PTI) MSMEs across India have exuded confidence in AI's potential to increase their productivity and performance, however lack of awareness, accessibility, and affordability draws a divide between conviction and adoption, a report has revealed.

Marking World MSME Day, technology industry body nasscom and social media giant Meta on Thursday released a white paper--Empowering India's Growth: Unlocking AI's Potential for Tech-Enabled MSMEs, which derives insights from ‘AI Enablement for MSMEs' programme for Indian tech MSMEs, conducted earlier this year.

The programme involved awareness and capacity-building workshops across Gurugram, Hyderabad, Bengaluru, Mumbai, and Pune, engaging over 300 CXOs.

The analysis revealed a strong belief in the potential of AI among MSMEs, with 94 per cent of MSMEs acknowledging its ability to drive business growth.

Further, 87 per cent of tech MSMEs (Micro, Small, and Medium Enterprises) showed confidence in AI's potential to improve overall productivity.

"MSMEs, pivotal to India's economic engine, are at a critical point in today's fast-evolving tech landscape. Integrating AI offers them a unique chance for unprecedented growth, increased productivity, and sustainable innovation.

"Ecosystem collaboration, coupled with access to user-friendly tools and resources, is essential for tech-enabled MSMEs to harness AI's full potential and for India to maximise its AI dividends," Sangeeta Gupta, Senior Vice President and Chief Strategy Officer at nasscom, said.

However, despite the widespread recognition of AI's potential, a significant gap persists between tech-enabled MSMEs' beliefs and their actual adoption of AI solutions.

While 91 per cent of respondents don't feel that the technology is widely accessible and affordable for all, more than half of those surveyed cited budget constraints as a hurdle for adoption.

Additionally, limited access to training resources, as highlighted by 72 per cent of MSMEs, presents serious concerns in developing the necessary expertise within their workforce to effectively implement and manage AI solutions.

"AI solutions often require scalability to accommodate growing business needs and increasing data volumes. MSMEs struggle to scale their AI infrastructure and applications, particularly if they lack the resources and technical capabilities to do so. This scalability challenge can hinder the long-term success and impact of AI adoption in MSMEs," the paper noted.

It further shed light on the lack of understanding of existing data protection laws in India, which it said makes it difficult for MSMEs to manage data effectively and comply with regulations.

"It is imperative for key players to come together and support the MSME ecosystem. Collaborative efforts are essential to create a conducive environment for AI enablement, ensuring that MSMEs can effectively leverage AI tools and technologies for their growth," the report said.

It recommended awareness-building and skill-development programmes, government-sponsored accelerator programmes, grants and subsidies for addressing the challenges.

It also said partnerships between MSMEs and AI solution providers, technology consultants, or research institutions, and developing user-friendly AI tools specifically designed for MSMEs can help reduce barriers to adoption.

According to the Government of India's definitions, micro-enterprises have investments up to Rs 1 crore and annual turnover up to Rs 5 crore; small enterprises have investments up to Rs 10 crore and annual turnover up to Rs 50 crore; and medium enterprises have investments up to Rs 50 crore and annual turnover up to Rs 250 crore.