- AI adoption could unlock economic opportunities worth more than $3 trillion for India’s MSMEs by 2047.
- MSMEs already contribute over 48 percent of India’s exports and employ more than 33 crore people.
- AI technologies could improve productivity, reduce costs and strengthen manufacturing competitiveness.
The AI opportunity for India MSMEs could exceed $3 trillion by 2047, according to a joint report by PwC India and the Observer Research Foundation. The study highlights how artificial intelligence could reshape India’s small business sector and significantly boost manufacturing growth.
Titled “Unlocking the AI Edge for MSMEs,” the report states that the adoption of advanced technologies such as artificial intelligence could help micro, small and medium enterprises improve productivity, streamline operations and strengthen their role in the global manufacturing ecosystem.
AI Opportunity for India MSMEs and Manufacturing Growth
The report estimates that if India successfully raises manufacturing’s share of GDP to 25 percent and MSMEs increase their contribution to manufacturing gross value added from 35.4 percent to 50 percent by 2047, the sector could unlock economic opportunities between $3.13 trillion and $3.21 trillion.
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Currently, MSMEs form the backbone of India’s industrial sector.
They contribute 35.4 percent of manufacturing value added, account for 48.6 percent of total exports, and provide employment to more than 33 crore people across the country.
With the integration of advanced digital technologies, the sector could become a key driver of India’s ambition to emerge as a global manufacturing hub.
How Artificial Intelligence Can Transform MSMEs
Artificial intelligence is expected to enhance business efficiency in multiple ways.
The report highlights several AI powered tools that could benefit small manufacturers, including:
- Predictive maintenance to reduce machine downtime
- Intelligent supply chain management
- AI based demand forecasting
- Automated quality inspection systems
These technologies could help MSMEs reduce operational costs, improve product quality and make faster data driven decisions.
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AI Could Add Billions to MSME Manufacturing by 2035
The study estimates that AI adoption alone could contribute between $135.6 billion and $149.9 billion to manufacturing MSME growth by 2035.
In addition, the expansion of AI infrastructure such as data centres and computing systems could generate $100 billion to $150 billion in additional demand for MSMEs supplying industrial equipment, cooling systems and related components.
This creates opportunities not only for digital services but also for manufacturing businesses linked to the AI ecosystem.
Challenges Slowing AI Adoption in MSMEs
Despite the potential benefits, the report notes several obstacles that are slowing AI adoption among small businesses.
Key challenges include:
- Limited digital readiness among MSMEs
- Shortage of technical expertise
- High initial costs of adopting new technologies
- Concerns about long term returns on AI investments
These barriers often prevent smaller enterprises from experimenting with advanced technologies.
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Building an Ecosystem for AI Adoption
To overcome these challenges, the report recommends a structured approach to technology adoption.
This includes improving access to AI tools, raising awareness among business owners and workers, integrating AI into everyday workflows and eventually embedding it into core business processes.
The study also stresses the need for collaboration between government agencies, technology companies, financial institutions and industry organisations to create a supportive ecosystem for MSMEs.
If implemented effectively, the report concludes that AI could help Indian MSMEs become more competitive globally while accelerating the country’s journey toward advanced manufacturing and innovation.
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