MSMEs Shine in E-Commerce, but Productivity Lags—Is Transformation Enough?

Updated: November 06, 2025 11:30

Image Source: The Economic Times

Indian MSMEs are rapidly embracing online platforms and digital tools, expanding their reach and sales. Yet, underlying productivity challenges persist due to fragmented workflows, skill gaps, and low integration of advanced technologies. Addressing these barriers is key for MSMEs to translate digital presence into tangible business growth.

India’s Micro, Small, and Medium Enterprises (MSMEs) are accelerating their transition to digital, with over 65% now leveraging online channels for daily operations and sales. Government push and affordable tech have brought thousands more MSMEs into e-commerce, cloud services, and digital payment ecosystems. Platforms like ONDC and UPI are making discoveries and transactions easier, while logistics firms and CPaaS providers help small businesses track deliveries and interact with customers in real time.

Despite these advances, productivity remains a weak spot. Less than 20% of MSMEs have integrated digital workflows or revamped decision-making, and only 18% operate at global productivity benchmarks set by OECD peers. A lack of skilled talent, fragmented software systems, costly implementation, and resistance to change slow down the full benefits of digitization. Limited access to tailor-made solutions, particularly for micro-enterprises and those in rural areas, deepens the urban–rural digital divide.

Industry experts say true transformation will require structured support, cloud-led integration, and a cultural shift from reactive tech adoption to strategic digital evolution. With AI, cloud automation, and connected platforms, MSMEs can move from just being visible online to becoming truly competitive and productive.

Key Highlights:

65%+ of MSMEs use digital platforms; growth in e-commerce, cloud, and digital payments.
Productivity lags—less than 20% have deeply integrated digital workflows.
Only 18% of Indian MSMEs match global productivity standards (OECD).
Key barriers: skill gaps, fragmented systems, costly implementation, and urban–rural divide.
Experts advocate cloud automation, AI, and unified digital systems for real productivity gains.
Government schemes and ONDC e-commerce are expanding the digital landscape.

Sources: DQIndia, EY India Report, NITI Aayog, Policy Circle, Deloitte

Stay Ahead – Explore Now! Continuity in Command: Medico Remedies Reappoints Harshit Mehta as Managing Director