The idea of an SME AI experience centre aligns with the Indian government’s Ministry of Micro, Small and Medium Enterprises Technology Centres (TCs) programme30 by complementing and building on its physical infrastructure. While the technology centres deliver sector-specific tools, training and technical services, experience centres will expand their reach with AI-driven demonstrations and real-time collaboration. This approach will improve awareness, enabling SMEs throughout India to start adopting advanced technologies. 2 Establishing cluster-based AI sandboxes This will provide an environment in which solution providers can develop and test AI solutions tailored to the cluster’s needs and challenges. By using local expertise and real operational data within the sandbox in a cluster, solution providers will be able to move rapidly from ideation to pilot-ready solutions. This will reduce the cost, risk and other complexities associated with AI solution development for SMEs. A cluster-based approach will ensure that solutions are relevant to the local challenges and increase adoption rates as stakeholders can see the immediate application as well as share resources. To scale, the AI sandbox may be established in partnership with research institutions and build on their domain knowledge and AI expertise. For instance, the 100 technology centres being established by India’s Ministry of Micro, Small and Medium Enterprises offers a foundation to integrate physical infrastructure with digital capabilities. These centres can host cluster-based AI sandboxes, enabling hands-on experimentation and virtual testing environments. Experience centres and AI sandboxes will have the following stakeholders: –SMEs, which are trying to gain exposure to AI applications and solutions –Government bodies, which will facilitate funding, resources and policy support –Industry associations that will serve as enablers identifying sector-specific challenges and driving MSME participation in their industries –Technology providers that will showcase AI solutions, tools and best practices –Start-ups and academia that are co- developing tailored solutions and offering mentorship to MSMEs –Non-governmental organizations (NGOs) that play a crucial role in community outreach, reskilling programmes and promoting AI awareness among less-privileged workforce segments 3 Conducting capability-building programmes for AI This will help to address some of the major workforce challenges that SMEs face – limited access to skilled workers, resistance to change, and insufficient training programmes – which must be addressed to enable AI-driven transformation. Without capability- building, SME AI initiatives run the risk of failure. Transforming Small Businesses: An AI Playbook for India’s SMEs 40

Transforming Small Businesses 2025