Indian MSMEs far behind rest of the world in AI adoption

Bengaluru: As the global chase of artificial intelligence (AI) heats up, the Bangalore Chamber of Industry and Commerce (BCIC) chose to focus on it in its flagship summit, only to underscore how India’s main manufacturing base - the micro, small and medium enterprises - are yet to get on the bus. 

Speakers also emphasised that AI is underutilised in the MSME manufacturing sector in India and should be perceived as a transformative opportunity rather than a disruptive challenge. 

Presently, India has a vast manufacturing base, with over 90% of our industrial units falling under the MSME category. These enterprises contribute nearly 30% of India’s GDP, employ 110 million people, and account for 48% of India’s exports, according to G Prakash, Chairperson, Manufacturing Expert Committee, BCIC.

“Many MSMEs have yet to embrace digitalisation or AI, often perceiving these technologies as costly and complex. AI-driven solutions now available through affordable cloud-based and plug-and-play models can deliver productivity gains of 15% to 30%, enabling predictive maintenance, quality monitoring, and energy optimisation, even in small-batch environments,” he added.

Globally, AI adoption in manufacturing stands at around 40%, with China, Germany, and the US driving the trend. On the other hand, India lags behind, with less than 25% adoption in organised manufacturing and even lower among MSMEs. 

The associated fears about AI adoption has also been playing with it having already begun to take over traditional roles especially in software development, like coding. “While concerns about job security persist, AI serves as an enabler, freeing employees from repetitive tasks and empowering them to focus on strategic and creative contributions. To thrive in this evolving landscape, upskilling and adaptability are essential,” said Vineet Verma, President BCIC.