Conclusion and call to action The IMPACT AI framework provides a roadmap to position India’s SMEs as leaders in the AI-enabled world. Anchored in creating awareness, inspiring action and receiving recognition, the framework provides pathways for key stakeholders to drive transformation. Each has a distinct role to play. Governments (central, state and local) can: –Enable technology centres as AI experience centres. Governments must build on the Ministry of Micro, Small and Medium Enterprises’ proposed network of 100 technology centres by integrating AI sandboxes, co-innovation hubs and experience centres for AI demonstrations and experiments. –Build capacity. Align governments’ AI programmes for SME entrepreneurs, reskilling programmes for the shopfloor workforce and talent strategies for SMEs. –Promote digital public infrastructure. Link initiatives such as the AI solutions platform and Udyam portal with ONDC to create a unified digital ecosystem for AI solutions. –Create incentive programmes. Roll out programmes that provide financial support such as subsidies, tax breaks and grants to de-risk AI adoption for SMEs. –Fashion recognition programmes. Central government must lead the SME AI pioneer initiative that seeks to identify and celebrate early adopters. MSME entrepreneurs must: –Assess AI readiness: Evaluate your current digital and AI maturity to understand where to begin. Take incremental steps to develop AI readiness. –Identify high-impact use cases: Focus on pressing business challenges where AI solutions can deliver measurable benefits. –Engage with local ecosystems: Participate in cluster initiatives, AI sandboxes or technology centres to access shared tools, training and peer support. –Invest in skills: Upskill yourself and your workers with basic AI and digital training to build internal capability. –Monitor impact and share learnings: Document outcomes and share learnings to inspire others and attract visibility as an AI-ready enterprise. AI start-ups should: –Develop accessible AI tools. Design plug-and- play AI solutions for SMEs and position them in the AI solutions platform. Solutions must be developed with a focus on affordability, ease of use and modularity for specific business challenges. –Collaborate on AI sandboxes. Partner with research institutions and SME clusters to validate AI solutions, ensuring they meet the practical needs of small businesses. –Expand e-commerce AI solutions. Use ONDC to scale AI-enabled platforms for SME exports, integrating features such as inventory optimization, payment reconciliation and compliance automation. –Foster AI ecosystem innovation. Actively participate in collaboration hubs to co-create solutions with academia, government and SMEs, ensuring scalability and domain relevance. Research institutions will: –Facilitate applied research. Create frameworks for evaluating AI maturity, identifying best practices and measuring the impact of AI adoption on SMEs. –Drive workforce transformation. Design reskilling programmes and explore how AI tools can be used to upskill SME entrepreneurs and workers for future roles. –Mentor start-ups. Provide domain expertise and collaborate on pilot projects to accelerate the adoption of AI solutions validated in sandboxes. –Develop AI experience centres. Partner with the government to create virtual and physical AI experience centres for SMEs that align with global models such as Fablabs.39 Transforming Small Businesses: An AI Playbook for India’s SMEs 45

Transforming Small Businesses 2025