Executive summary Micro, small and medium enterprises (MSMEs) are the backbone of India’s economy, generating employment and playing a pivotal role in the country’s socioeconomic development. With MSMEs contributing nearly 30% of India’s GDP , employing more than 230 million people and accounting for nearly half of India’s exports, their growth trajectory is crucial for achieving India’s ambition of becoming a $7 trillion economy by 2030. Yet MSMEs in India face numerous challenges such as operational inefficiencies, limited financial resources and constrained scalability. Artificial intelligence (AI) has emerged as a transformative force for MSMEs that can enable them to overcome these challenges. Adoption of AI technologies in the MSME ecosystem can unlock significant value for the Indian economy, with the potential to generate more than $490 billion in economic value for MSMEs. However, in their current state, these organizations face significant barriers to adoption that hinder their ability to harness AI’s potential. The aim of this report is to alleviate the barriers to AI adoption faced by MSMEs by curating the efforts of multiple stakeholders in government, industry, MSME associations and academia. The report also demystifies the use of AI in MSME organizations through illustrative use cases along with a framework to help them identify and prioritize relevant use cases for their business. The need for an AI playbook The implementation of AI systems in Indian MSMEs is hindered by significant obstacles, including a lack of AI awareness and of data and data systems, accessibility of relevant solutions and workforce capabilities. These challenges present the need for a clear and well-defined framework to guide the efforts of stakeholders towards the acceleration of AI adoption in Indian MSMEs. This playbook is designed to help policy-makers design appropriate interventions to scale the use of AI in MSMEs as well as guide the MSME ecosystem towards becoming AI-ready.The AI playbook for MSMEs has five main purposes: 1. To articulate and highlight the major barriers faced by MSMEs in their AI adoption journey 2. To offer an overview of major AI use case categories in the MSME ecosystem and present a framework to enable MSMEs to prioritize relevant AI use cases 3. To inspire MSMEs to use the transformative power of AI by showcasing real-world case studies 4. To present a structured framework based on three critical pillars – awareness, action and recognition – to accelerate AI adoption in MSMEs 5. To provide a call to action as well as a detailed implementation roadmap delineating the role of different stakeholders Methodology To create a practical and context-sensitive playbook, the World Economic Forum, with the guidance of the AI for India 2030 Advisory Council, established a multistakeholder expert group. This included policy-makers, industry associations, leading technology companies and academia, ensuring a comprehensive range of perspectives. Further, many stakeholders outside the expert group – including MSMEs, MSME associations, MSME workers and research institutions – were also consulted. The methodology for developing the playbook involved three key steps: 1. Design thinking-driven research combined with ethnographic studies of MSMEs to understand their pain points and business challenges 2. Expert consultations through in-depth interviews to understand the primary challenges faced by MSMEs with respect to AI adoption as well as high-value use cases 3. Contextual analysis to develop relevant case studies and use case illustrations to inspire MSMEs to implement AI in their ecosystems This report presents a structured roadmap for stakeholders to accelerate the adoption of AI at scale within India’s micro, small and medium enterprises. Transforming Small Businesses: An AI Playbook for India’s SMEs 4

Transforming Small Businesses 2025