AI could unlock over $490 billion in economic value for India's MSMEs, while improving business profitability by 30-35%, according to a Google-India SME Forum report.
Nearly 60% of surveyed MSMEs reported double-digit revenue growth, while 66% expanded market access and 58% improved customer acquisition through digital tools.
Agentic AI and automation could reduce operating costs by 20-30%, improve productivity by 15-20%, and increase customer conversions by 23%, the report said.
AI Could Add Over $490 Bn to India's MSMEs; Here's How
Google and India SME Forum report says digital adoption and AI are reshaping India's MSME sector, driving higher revenues, productivity and profitability
Dall.E
Summary
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Artificial intelligence (AI) could unlock more than $490 billion in economic value for India's micro, small and medium enterprises (MSMEs), while improving business profitability by up to 35%, according to a report released by Google and the India SME Forum on Tuesday.
The report, titled "The Google Dividend: Measuring Digital Commerce's Contribution to India's Economic Future", is based on a survey of 3,249 MSMEs along with macroeconomic data. It highlights how digital adoption and AI are helping small businesses expand market access, improve productivity and integrate more effectively into domestic and global value chains.
The report found that digital adoption is already delivering tangible business benefits.
Around 66% of surveyed MSMEs said digital tools helped them expand into new markets, while 58% reported improved customer acquisition. Nearly 60% of businesses achieved double-digit revenue growth after adopting digital technologies.
AI is expected to further accelerate these gains by automating routine operations, optimising supply chains and enhancing customer engagement.
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According to the report, wider AI adoption could improve profitability by 30-35%, while early implementation pilots indicate operational costs could decline by 20-30%.
Businesses are also seeing stronger returns from digital advertising. More than half (54%) of respondents reported returns of at least 2x to 3x on advertising spend, with some businesses achieving returns of up to 5x.
Beyond individual businesses, the report estimates that MSME digital advertising activity contributes around ₹49,700 crore in economy-wide output and ₹32,300 crore in Gross Value Added (GVA).
It also estimates that GST collections linked to this digital activity have risen by more than two-thirds over the past two years to reach ₹6,534 crore in 2025.
Minister of State for MSME and Labour & Employment Shobha Karandlaje, in a message read out during the report launch, said digital technologies and AI are helping democratise market access for small businesses irrespective of their size or location.
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She added that technology adoption would play a key role in advancing the government's Viksit Bharat 2047 vision.
MSME Secretary Bharat Khera described AI as a business enabler that would shape the next phase of enterprise growth by improving productivity, competitiveness and integration into global value chains.
Google's Vice President and General Manager for Ads & Commerce, Vidhya Srinivasan, said the next wave of agentic AI would help businesses identify potential customers, predict local demand and automate routine tasks.
The report estimates that AI-driven automation across functions such as merchandising, sourcing and supply chains could deliver 15-20% productivity gains, while AI-powered personalisation and product cataloguing can improve conversion rates by 23%.
The report concludes that broader access to digital technologies and AI will be critical to enabling India's MSMEs to scale efficiently and drive the country's next phase of inclusive economic growth.
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