Digital, But Not Yet Intelligent: The Curious Case of MSMEs Missing the AI Bus

Image Source: BW Business World

India's MSMEs are undergoing a digital metamorphosis with the widespread use of smartphones and UPI payments. However, a new national poll indicates a harsh disconnect: only 7% of MSMEs are now interested in adopting AI tools, indicating the sector's gradual shift from digital complacency to cutting-edge technology adoption.

Key Highlights

Digital Backbone, But AI Hesitation Remains

71% of MSMEs currently rely on smartphones as their primary business tool, with women entrepreneurs at the forefront at 84%.
UPI is the most popular electronic payment system (48%), followed by Aadhaar-based banking (39%).
Regardless of this, only 7% of MSMEs are using AI-based tools, primarily for simple automation tasks such as inventory management, billing, and customer interactions.

Barriers to AI Adoption:

Unaffordable AI infrastructure, tool, and training expense are some of the major hindrances—59% of MSMEs cite fiscal constraints.
Most of the available AI solutions are generic and not customized according to the varied operational requirements of MSMEs in various sectors.
There are language and usability gaps still: 38% of female entrepreneurs desire local language interfaces, but most technology platforms default to English.
A mere 26% of MSMEs have received digital skill training, which reflects a gap in capacity building.

The Case for "Desi AI":

Experts call for low-cost, modular, and locally-developed AI solutions that address sector-specific challenges—"Desi AI".
Customization, user-friendliness, and local language interfaces are deemed to be the most critical for broader adoption of AI.

Bright Spots & Government Push

While today 67% of MSMEs are digitally enabled, 23% have integrated newer technologies like AI, IoT, and analytics.
Existing government programs (SAMARTH Udyog Bharat 4.0, Digital MSME Scheme) offer funds and technical support for the implementation of Industry 4.0, including AI.

The Road Ahead

While digital technologies have enabled measurable business expansion for MSMEs, AI's advent is constrained by cost, complexity, and lack of tailored solutions. Industry leaders and policymakers are calling for a new generation of "Desi AI" innovations—_cost-effective, inclusive, and tailored to India's heterogeneity of MSMEs—to achieve the next order of productivity and competitiveness.

Source: BusinessWorld, Economic Times, ABP Live