Transforming Small Businesses 2025

2 Design an AI solutions marketplace This initiative focuses on making AI accessible and user-friendly for SMEs. Discovery tools enable companies to find plug-and-play AI solutions for use cases such as inventory optimization, customer insights and predictive maintenance, which are tailored to their needs. Transparent reviews on this platform can build trust by offering feedback on functionality, impact and user experiences, helping SMEs make informed decisions. By reducing complexity, costs and entry barriers, this initiative inspires SMEs to explore and adopt AI technologies. Such an AI solutions marketplace can also integrate with India’s Open Network for Digital Commerce (ONDC)38 to serve as the go-to platform for MSMEs. By tapping into ONDC’s network and capabilities, the AI solutions platform can position itself as a one-stop solution for SMEs. The ONDC’s decentralized framework offers an opportunity to connect AI solution providers with SMEs, ensuring accessibility and visibility. This integration will enable small companies to: –Discover validated AI solutions. SMEs will be able to access a catalogue of cross-industry and cross-functional AI tools, services and products that have been verified and validated through the AI sandboxes. –Compare costs, subsidies and incentives. Transparent cost-comparison features, as well as government subsidies and incentives, can be integrated into the platform. –Review systems. Trust can be built through user-generated reviews and ratings on AI tools, creating a transparent environment.3 Identify alternative funding models for AI investments by SMEs For many SMEs, cost is one of the largest barriers to AI adoption. SMEs operate with limited financial capital and have low margins. While larger enterprises can tap into robust cash flows or external capital, SMEs often face capital constraints. To overcome this, there is a need to identify alternative funding models – supported by government programmes, industry partners and financial institutions – that can provide flexible and cost-effective ways to invest in AI. Some options to consider are: –Government grants and subsidies. Government can offer tax credits for AI-related capital expenditure undertaken by SMEs, directly lowering the cost of adoption. Furthermore, interest rate subsidies specifically designated for AI investment can be channelled through public- sector banks or institutions such as the Small Industries Development Bank of India (SIDBI). –Cluster-based financing. Groups of SMEs within a cluster can pool resources and procure solutions. This ensures greater bargaining power and lower individual costs. Additionally, common digital infrastructure such as compute credits or data management platforms can be procured jointly or made available at cluster sandboxes. –Industry and corporate partnerships. Large corporates in the supply chain of a sector can sponsor AI adoption by smaller supplier SMEs. CSR mandates can be used to allocate funds to SME AI transformation projects. –Specialized lending products. AI investments have a longer return cycle. Banks and non- banking financial companies (NBFCs) can develop dedicated loan products for AI investments with more flexible repayment schedules and reduced collateral requirements. These models can spread the financial burden of AI investment among multiple stakeholders, making the path to AI adoption for SMEs more collaborative and sustainable. For many SMEs, cost is one of the largest barriers to AI adoption. 43 Transforming Small Businesses: An AI Playbook for India’s SMEs43