S. Krishnan Secretary of the Ministry of Electronics and Information Technology (MeitY), Government of IndiaAjay Sood Principal Scientific Adviser to the Government of India Nipun Kalra Managing Director, Senior Partner and India Head, BCG XJeremy Jurgens Managing Director, Centre for the Fourth Industrial Revolution and Centre for Cybersecurity, World Economic Forum Transforming Small Businesses: An AI Playbook for India’s SMEsMay 2025 India stands on the cusp of a transformative opportunity, driven by the potential of artificial intelligence to empower micro, small and medium enterprises (MSMEs). India has more than 60 million1 MSMEs that drive its economy – creating employment, contributing to around half of the country’s exports and 30% of its GDP . Despite its potential, the MSME sector in India faces formidable challenges, including operational inefficiencies, limited scale, constrained access to markets and inadequate financial support. These obstacles not only limit growth in the short term but also restrain MSMEs from achieving long-term competitiveness on the global stage. Artificial intelligence (AI) can transform these organizations by enhancing their productivity, optimizing operations and unlocking finance as well as new markets. However, their adoption of AI at scale requires a structured and collaborative approach due to the multiple systemic barriers that hinder AI adoption. Addressing these barriers through a collaborative effort can enable the organizations to realize AI’s immense potential in their business operations. This report, Transforming Small Businesses: An AI Playbook for India’s SMEs, aims to simplify this adoption journey by guiding the efforts of multiple stakeholders. It recognizes the diversity of MSMEs in India and emphasizes the importance of taking a cluster-based approach to ensure maximum on-the-ground impact. It highlights the key barriers to AI adoption for MSMEs and shows a way forward using the three-pillar framework for accelerating AI adoption along with a clear implementation roadmap in the form of a call to action. It also showcases some high-value AI use cases in these organizations and presents case studies to highlight real-world impact. Furthermore, it provides a framework for MSMEs to identify high-value use cases relevant to their business. This playbook is the result of extensive consultations with policy-makers, MSME entrepreneurs, industry bodies and leaders and academics. It reflects a collective vision for harnessing the power of AI to address major challenges and transform MSME organizations. The report aims to align government, private enterprises, academia and MSMEs in building an AI ecosystem that promotes a future in which MSMEs are financially empowered, operationally robust and technologically advanced. We therefore request all stakeholders to reflect on the insights captured here and bring them to action by adapting the recommendations to their own unique context. The report’s authors extend their deepest gratitude to all stakeholders whose expertise, vision and dedication have shaped this initiative. They hope this playbook serves as a beacon, guiding the Indian MSME ecosystem towards a vibrant, innovative and competitive future.Foreword Transforming Small Businesses: An AI Playbook for India’s SMEs 3

Transforming Small Businesses 2025