their jurisdictions. In fact, it has been designed to complement the many AI-related initiatives already under way in India such as the IndiaAI Mission,22 overseen by India’s Ministry of Electronics and Information Technology, and the AI initiatives and pilots, such as the Telangana AI Mission23 and Karnataka’s AI centres of excellence,24 set up by the country’s state governments. The AI playbook for Indian MSMEs has three distinct dimensions: 1. It provides a framework for identifying high-value AI use cases for SMEs in India. 2. It offers a framework to drive AI adoption by SMEs: a. Creating awareness through use case experience centres and AI sandboxes as well as through various tools for capability-building b. Inspiring action (through DNA – data, network and AI applications) by using an AI maturity index, proposing an AI solutions marketplace and identifying alternative funding models for AI investments c. Receiving recognition for SME AI pioneers that are early adopters of the technology to inspire the ecosystem and build trust; this is followed by partnership with programme anchors such as central ministries and state governments as well as industry and SME associations 3. It shows the way forward for SME entrepreneurs and policy-makers through a detailed roadmap for accelerating AI adoption in Indian SMEs. 1.5 The multistakeholder methodology of the playbook The AI playbook for Indian MSMEs emerged from collaborations coordinated by the World Economic Forum in India, guided by the AI for India 2030 Advisory Council. In 2024, the Forum established an expert group to explore how AI could address the systemic challenges faced by MSMEs. The methodology combined design thinking-driven research backed by stakeholder engagement that included ethnographic studies of SMEs in Bengaluru, Chennai, Coimbatore, Goa and Mumbai as well as workshops with SME entrepreneurs in these geographies. The report team engaged with more than 30 industry experts, start-ups, consultants and academics at two joint consultations. These discussions were complemented by in-depth interviews with MSME experts, AI specialists and SME CEOs. This approach of expert consultation and ground- level engagement provided crucial insights into the high-value use cases that would benefit SMEs as well as the challenges of AI adoption in SMEs. The report findings, synthesized from these engagements, form the foundation for this playbook. In addition to an evaluation of the specific challenges that SMEs face in implementing AI technologies, the report showcases an AI use case prioritization framework and illustrates some high-value use cases that were selected for their impact potential to address critical operational inefficiencies and enhance SME competitiveness as well as the feasibility of implementation. Finally, all of the insights have been integrated into an IMPACT AI Framework, which offers guidance for policy-makers and SMEs starting out on their AI journeys. It maps the concrete ways in which policy-makers can spur AI adoption by SMEs and position the early adopters as pioneers for others to emulate. Identifying exemplars will generate confidence among SMEs and pave the way for AI adoption at scale in Indian SMEs. This playbook has been designed to complement the many AI-related initiatives already under way in India. Visuals from a workshop with MSME promoters and associations in Chennai, Tamil Nadu Transforming Small Businesses: An AI Playbook for India’s SMEs 14

Transforming Small Businesses 2025