What's Happening?
A recent report by PwC, titled 'Unlocking the AI Edge for MSMEs,' projects that Artificial Intelligence (AI) could significantly enhance the growth of Micro, Small, and Medium Enterprises (MSMEs) in India's manufacturing sector. The report estimates that AI could contribute
between USD 135.6 billion and USD 149.9 billion to this sector by 2035. This growth is contingent upon MSMEs increasing their contribution to the nation's manufacturing gross value added (GVA) from 35.4% to 50%. The report highlights the potential for MSMEs to unlock growth opportunities valued at USD 3.13-3.21 trillion by 2047, provided India raises its manufacturing GDP share to 25%. AI adoption on shop floors and integration into global value chains are seen as critical steps for MSMEs to achieve this growth.
Why It's Important?
The integration of AI into MSMEs is poised to transform the manufacturing landscape in India, potentially positioning these enterprises as key players in the global market. By adopting AI, MSMEs can overcome structural and operational constraints, enhancing their competitiveness and productivity. This shift could lead to a significant increase in India's manufacturing output, contributing to economic growth and job creation. The report also identifies a substantial demand-side opportunity for MSMEs to supply non-technical manufacturing products to AI infrastructure and chip manufacturers, further expanding their market reach.
What's Next?
For MSMEs to capitalize on these opportunities, the report suggests a '3A2I framework' focusing on access, acceptance, assimilation, implementation, and institutionalization of AI technologies. This framework aims to help firms translate AI adoption into measurable value. As MSMEs begin to implement AI, they may see improvements in areas such as predictive maintenance, quality control, and inventory management, which could lead to increased efficiency and reduced costs.
