Micro, small, and medium enterprises contribute significantly to India's manufacturing sector and total gross domestic product. Incorporating automation can streamline routine tasks ranging from tax documentation and invoice processing to predictive maintenance and visual defect detection. Studies project this shift could enhance firm profitability by up to 35% over the coming years. Realizing these benefits hinges on addressing adoption costs through shared industrial cluster infrastructure and native-language digital tools.
Key points
Deploying automation allows smaller firms to cut expenses and minimize operational errors…: Deploying automation allows smaller firms to cut expenses and minimize operational errors across administrative and manufacturing workflows.
Human supervision remains vital for critical legal and financial decisions when utilizing…: Human supervision remains vital for critical legal and financial decisions when utilizing automated systems.
Industry clusters offering shared demonstration facilities and regional language tools ar…: Industry clusters offering shared demonstration facilities and regional language tools are essential for entrepreneurs with limited digital backgrounds.
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MSMEs contribute 31.1% to India's GDP, account for around 35.4% of its manufacturing and 48.58% of its exports, according to the Economic Survey 2025-26, tabled in Parliament on January 29, 2026. The sector comprises 7.47 crore enterprises employing over 32.82 crore people, making it the country’s second-largest employer after agriculture.
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For smaller businesses, the questions are practical: which problems can AI solve, what will it cost, and who can help implement it?
Puran Dawar, Co-Chair of the ASSOCHAM MSME Development Council and Chairman of Dawar Footwear, says industry clusters could help make AI more accessible by providing shared facilities, demonstrations and expert guidance.
“MSMEs need help solving specific problems, not just buying technology,” Dawar said, emphasising that adoption must go hand in hand with practical training for business owners and workers.
From potential to practical gains
A 2026 report by PwC India and the Observer Research Foundation (ORF), Unlocking the AI Edge for MSMEs, estimates that AI could create…
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