Their major contribution to employment creation, GDP, and foreign exchange through exports, micro, small, and medium-sized enterprises (MSMEs) are the pillars of the Indian economy. Technology adoption is one of the largest MSME challenges, so they wouldn't fall behind otherwise. To rise and thrive in the digital era, artificial intelligence (AI) is revolutionizing the scenario for MSMEs by offering lean, affordable, and scalable solutions.
Here, we explain how AI is enabling Indian MSMEs to bridge the technology gap by allowing them to automate processes, become efficient, and compete globally.
MSMEs' Contribution to the Indian Economy
More than 63 million MSMEs in India contribute 49% to exports and 30% of the nation's GDP. The sector has transformed into several service, retail, manufacturing, and agri-businesses. Not all MSMEs employ correct technology, capital, or legacy processes.
With process automation, improved decision-making, and data-driven insights, artificial intelligence (AI) has a vast potential to revolutionize the MSME sector.
How AI Is Changing Indian MSMEs?
1. Business Process Automation
MSMEs implement AI technologies to automate repetitive functions like:
- Customer support: Virtual conversations and chatbots respond to customers' queries 24x7, saving time and enhancing customer satisfaction.
- Accounting & finance: Accountancy software that is powered by artificial intelligence bills, accounts, and taxation calculations.
- Stock management: Intelligent systems based on AI track inventory in real-time preventing loss and maintaining the highest stocks.
All these are automated and hence enable MSMEs to save time, save money, and become efficient.
2. Marketing & Customer Engagement Development
Customer base expansion is highly important for MSMEs, and online marketing assists in it. AI facilitates this in the following manners:
- Personalized marketing: AI tracks customers' interests and behavior, and companies can recommend products accordingly.
- Chatbots & virtual assistants: AI-driven chatbots interact with customers, guide them, and even make orders.
- Social media insights: Social media is monitored by AI tools, and MSMEs can create context-specific content and interact with the target customer segment.
These AI-based campaigns generate recall from customers' and consumers' loyalty.
3. Financial Inclusivity & Risk Management Building
The largest problem with MSMEs is that they are not receiving loans because they do not have borrowing and repayment history of loans. AI fintech solutions correct:
- Credit risk scoring: Artificial intelligence determines creditworthiness based on financial data, with lending made available to MSMEs with ease.
- Fraud detection: Artificial intelligence detects fraud, preventing financial fraud and transaction security.
- Automated lending: AI-based platforms like online lending apps enable instantaneous sanctioning of loans with AI-based risk assessment.
It provides MSMEs with access to capital in critical need through financial democratization.
4. Supply Chain & Logistics Optimization
Artificial intelligence optimizes supply chains by
- Demand forecasting: AI forecasts demand patterns, and businesses can schedule production and stock.
- Route optimization: AI logistics software determines the optimal route to carry, minimizing transport expenses.
- Predictive maintenance: AI forecasts equipment failure, preventing expensive downtime.
MSMEs will enjoy more supply chain control and fewer delays and expenses with AI.
Government Initiatives Promoting the Integration of AI for MSMEs
The following are the initiatives of the Indian government to promote the adoption of AI among MSMEs:
- Digital India: Promoting the adoption of digitalization among MSMEs.
- Startup India: Leveraging MSME solutions for AI start-ups.
- AI for All Initiative: Focusing on awareness generation and offering AI education. Facilitating the adoption of AI and other digital technologies among MSMEs under the MSME Champion Scheme.
All these initiatives promote the adoption of AI through financing, training, and handholding.
AI Potential for Indian MSMEs
Indian MSMEs are set to flourish with artificial intelligence. With growing digital penetration and AI-based solutions being more economical, MSMEs will:
- Leverage AI to enhance efficiency and productivity.
- Use AI to make decisions.
- Leverage AI in process automation and simplify life.
- Leverage AI-based online marketing to reach their global markets.
- The technology divide will be filled by AI technologies and MSMEs will thrive effortlessly in the digital economy.
Conclusion:
With the use of AI, MSMEs can become automated, low-cost, and globalized businesses. Economic AI technologies and policy initiatives are helping small businesses to access technology even in unfavorable conditions.
As more and more uses of AI are coming into the pipeline, Indian MSMEs will not only survive but thrive in the digitalization period and contribute further to economic growth in the country.
MSMEs can thrive in the long term in the fast-evolving market scenario by taking the assistance of AI to bridge the gap between old business strategies and the era of digitalization.
