27 - 06 - 2026

India bets on AI to transform its 64mn small businesses

India is betting on artificial intelligence to modernise its 64 million micro, small and medium enterprises (MSMEs), with the government positioning AI as a key driver of productivity, competitiveness and economic growth as it pursues its ambition of becoming a developed economy by 2047.

The strategy received a strong endorsement from Vice President CP Radhakrishnan on Saturday, who urged entrepreneurs to embrace AI rather than fear it, arguing that every major technological shift had ultimately created new jobs and business opportunities.

Addressing the International MSME Day 2026 celebrations in Bengaluru, Radhakrishnan said the country’s vast MSME sector would be at the centre of India’s “Viksit Bharat” roadmap, with technology adoption, innovation and quality becoming the defining factors for long-term competitiveness.

“Technology and AI should be embraced as opportunities, not feared as threats,” he said, comparing current concerns over AI with the scepticism that surrounded the introduction of computers before they became integral to business and economic growth.

The remarks reflect New Delhi’s broader effort to digitise the MSME sector, which contributes about 30 per cent of India’s GDP, accounts for nearly 45 per cent of exports and employs more than 250 million people. Policymakers increasingly view AI-enabled enterprises as essential to improving productivity, expanding exports and helping smaller firms compete globally.

Radhakrishnan said sustained competitiveness would depend not on cutting costs alone but on combining quality with innovation and technology adoption.

He urged entrepreneurs to scale their businesses, saying micro enterprises should evolve into small firms and small enterprises into medium-sized businesses through greater investment, easier access to finance and supportive government policies.

He also called for universal registration of MSMEs, arguing that better data would enable more targeted policymaking and improve access to government support and institutional credit.

As part of the government’s digitalisation drive, the Vice President launched a suite of upgraded digital platforms covering financing, procurement, grievance redressal, marketing, testing services and multilingual access for MSMEs. He also inaugurated the MSME Idea Hackathon 6.0 and marked the elevation of the National Small Industries Corporation to Schedule ‘A’ public sector status.

The event was attended by Union MSME Minister Jitan Ram Manjhi and Minister of State Shobha Karandlaje, underscoring the government’s intent to make AI and digital transformation central to the next phase of growth for India’s small-business economy.