AI adoption by MSMEs likely to unlock over $490 bn: Google – India SME Forum report

Advanced AI workflows and agentic systems are democratising sophisticated business capabilities, allowing grassroots enterprises to automate operations, optimize supply chains, and unlock a projected 30–35% improvement in profitability. By cutting operational friction and removing resource constraints, these intelligent technologies are expanding horizons to significantly improve both productivity and profitability for Indian MSMEs. AI adoption by Indian MSMEs is projected to unlock over $490 billion in economic value, says the Google – India SME Forum Report.   

Google and India SME Forum have released, ‘The Google Dividend: Measuring Digital Commerce's Contribution to India's Economic Future’. Drawing on a primary survey of 3,249 MSMEs and calibrated macroeconomic data, the report outlines how digital tools address structural gaps in visibility and resource access. 

The report further says 66% of surveyed MSMEs reported expanded market access, while 58% saw improved customer acquisition.

Nearly 60% MSMEs have achieved double-digit revenue increases, while the strategic adoption of AI is projected to unlock an average 30–35% improvement in overall business profitability.

Meanwhile, the report notes that 78% experienced a notable drop in customer acquisition costs, and early AI integration pilots show the potential to reduce operational costs by 20–30%.

As per 54% of respondents, they achieved strong returns of at least 2x to 3x gains, with top performers hitting up to 5x on ad spend.

At the launch of the report, a message from Sushri Shobha Karandlaje, Minister of State for MSME and Labour & Employment, was read out: “The true depth of our economic progress is found in the aspirations of millions of small-scale enterprises, artisans, and entrepreneurs spanning every corner of India. Technology is reshaping grassroots commerce, allowing a business in any district to command visibility and engage consumers directly. This democratization ensures that market exposure is accessible to all, irrespective of geographic location or capital size. Under the leadership of Hon’ble Prime Minister Shri Narendra Modi, the Ministry of MSME remains committed to improving access to finance and markets, promoting formalisation, strengthening skilling, and encouraging technology adoption through the Udyam ecosystem and a range of schemes and initiatives. As we work toward a future-ready economy under the vision of Viksit Bharat 2047, robust digital tools, particularly AI adoption, can help micro and small enterprises expand their commercial horizons, accelerate formalization, and drive sustainable growth. I congratulate Google India and the India SME Forum on ‘The Google Dividend’ report, which is a valuable, data-rich look at how digital adoption is powering India’s MSME sector.”

Vinod Kumar, President, India SME Forum, said, “The long-term trajectory of India's digital economy will  depend not only on the pace of technological advancement, but also on the extent to which MSMEs are  able to absorb and deploy these capabilities productively. For many small businesses, constraints related  to information asymmetries, managerial bandwidth and access to specialised capabilities can limit their  ability to scale and compete effectively. The findings of this report suggest that digital adoption and the  growing accessibility of artificial intelligence can help narrow some of these structural disadvantages.” 

Vidhya Srinivasan, VP / GM,  Ads & Commerce, Google, said: "India’s digital maturity has unlocked new opportunities for small businesses. Our AI-powered tools have helped millions of small businesses reach new customers on Google and convert real-time consumer interest into growth. Looking ahead, agentic AI will actively work on a business’ behalf to connect them with ready buyers, predict hyper-local demand shifts, and win new customers at the exact moment of intent."