India's Guide to Using AI Tools to Unlock Hundreds of Billions in Value for Small Businesses
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation, and Infrastructure | SDG 17: Partnerships for the Goals
Institutions: Ministry of Electronics and Information Technology (MeitY) | Ministry of MSMEs
This report, Transforming Small Businesses: An AI Playbook for India’s SMEs, is a foundational guide from the World Economic Forum, the Office of the Principal Scientific Adviser, and MeitY, detailing how Artificial Intelligence (AI) can revolutionize India’s Micro, Small, and Medium Enterprises (MSMEs). MSMEs are the bedrock of the economy, contributing 30% of India’s GDP and nearly half of its exports, but they are often held back by operational inefficiencies and limited financial resources.
AI adoption across this sector is projected to unlock a staggering $490–685 billion in economic value. This value is realized through three main avenues: increasing productivity by 15–20% (equating to up to $215 billion), reducing operational costs by 20–30% (saving up to $300 billion), and fostering financial inclusion for millions of businesses. AI-driven credit assessment, for example, can reduce loan processing time from weeks to hours and help bridge the enormous $530 billion credit gap currently faced by MSMEs.
The playbook introduces the IMPACT AI Framework, a multi-partner, cluster-based strategy to overcome barriers like low digital literacy, lack of data infrastructure, and cost concerns. This framework is built on three core pillars:
Creating Awareness: Establishing AI Experience Centres and specialized AI Sandboxes within MSME clusters to visually demonstrate the return on investment (ROI) and build trust through peer-to-peer (P2P) learning.
Inspiring Action: Providing actionable tools like the AI Maturity Index to help businesses self-assess their readiness, launching an AI Marketplace for validated, affordable plug-and-play solutions, and facilitating alternative funding models.
Receiving Recognition: Creating the MSME AI Pioneers program to celebrate successful early adopters, which inspires broader industry adoption and positions these firms as role models.
The guide highlights the transformative potential of advanced AI technologies, particularly AI Agents, which can simplify complex tasks like automating export documentation and compliance (India’s border compliance process currently takes over 52 hours compared to 21 hours in China).
What are AI Agents?→ They are a new class of autonomous or semi-autonomous AI systems that can observe their environment (via sensors or data feeds), use AI models to create a plan, and then execute complex tasks with minimal human intervention. For MSMEs, they offer low-code solutions for advanced functions like real-time credit risk monitoring, logistics optimization, and automated quality checks without requiring heavy technical expertise.
Follow the full report here: Transforming Small Businesses: An AI Playbook for India’s SMEs