AI Adoption Could Boost MSME Profitability By Up To 35%: Google Report

New Delhi, Jul 8 (KNN) The strategic integration of artificial intelligence is expected to enhance overall business profitability of Indian micro, small and medium enterprises (MSMEs) by an average of 30–35 per cent, according to a joint report by Google and the India SME Forum.

The report also found that digital adoption has helped nearly 60 per cent of Indian MSMEs achieve double-digit revenue growth. 

Vidhya Srinivasan, VP and GM, Ads and Commerce, Google, said, "India's digital maturity has unlocked new opportunities for small businesses. Our AI-powered tools have helped millions of small businesses reach new customers on Google and convert real-time consumer interest into growth," ANI reported.

"Looking ahead, agentic AI will actively work on a business' behalf to connect them with ready buyers, predict hyper-local demand shifts, and win new customers at the exact moment of intent," she added.

Key Findings

The report noted a significant shift in the commerce ecosystem, with 66 per cent of surveyed MSMEs reporting expanded market access and 58 per cent recording improved customer acquisition. 

Additionally, 78 per cent of enterprises surveyed reported a notable drop in customer acquisition costs. 

On the macroeconomic front, digital advertising by MSMEs is associated with approximately Rs 49,700 crore in economy-wide output and Rs 32,300 crore in Gross Value Added (GVA).

Government Response

In a message read out at the launch, Minister of State for MSME Shobha Karandlaje said, "The true depth of our economic progress is found in the aspirations of millions of small-scale enterprises, artisans, and entrepreneurs spanning every corner of India. Technology is reshaping grassroots commerce, allowing a business in any district to command visibility and engage consumers directly," as quoted by ANI.

"This democratisation ensures that market exposure is accessible to all, irrespective of geographic location or capital size," the MoS noted, adding that the MSME Ministry remained committed to improving access to finance and markets, promoting formalisation, strengthening skilling, and encouraging technology adoption through the Udyam ecosystem and related schemes.

Bharat Khera, Secretary, Ministry of MSME, highlighted that AI would act as a business enabler shaping the future of enterprise, adding that the next phase of growth would require quality, innovation and stronger collaboration among government, industry, financial institutions and technology partners to build globally competitive enterprises.

Industry Perspective

Vinod Kumar, President, India SME Forum, said, "For many small businesses, constraints related to information asymmetries, managerial bandwidth and access to specialised capabilities can limit their ability to scale and compete effectively. The findings of this report suggest that digital adoption and the growing accessibility of artificial intelligence can help narrow some of these structural disadvantages."

(KNN Bureau)