New Delhi, March 7: Artificial Intelligence (AI) has the potential to revolutionize India’s manufacturing sector, particularly for micro, small, and medium enterprises (MSMEs). A recent report estimates that by 2035, AI could contribute between $135.6 billion and $149.9 billion to this sector’s value creation. This projection assumes that MSMEs will increase their share of India’s total manufacturing value added to 50 percent. The report was jointly released by PwC India and the Observer Research Foundation (ORF) on Saturday.
According to the report, if India successfully raises the manufacturing share of its GDP to 25 percent and increases the MSME contribution from 35.4 percent in the fiscal year 2023-24 to 50 percent by 2047, the sector could unlock growth potential ranging from $3.13 trillion to $3.21 trillion.
Sanjay Krishna, Chairperson of PwC India, stated that AI is no longer confined to large corporations. When utilized as an enabling technology, it can help MSMEs break free from low productivity traps and compete based on quality, speed, and innovation.
He emphasized that AI should be designed to be accessible, affordable, and useful for businesses of all sizes. This would allow MSMEs to overcome structural limitations and integrate more effectively into global value chains.
The report highlights that AI could transform the entire value chain of manufacturing MSMEs. Applications include predictive maintenance of machines, energy optimization, camera-based quality inspections, AI-driven loan assessments, multilingual customer service, regulatory compliance, and generative design.
AI is expected to lower technical barriers and reduce mass production costs, enabling smaller industries to achieve better quality, meet global standards, and increase production speed.
The report also indicates that significant investments in data centers and the semiconductor industry are likely in the near future. This presents opportunities for MSMEs to supply non-technical capital goods such as cooling equipment, harnesses, and industrial parts.
In the long run, this could create new manufacturing opportunities worth between $100 billion and $150 billion.
Meanwhile, Samir Saran, President of ORF, noted that the success of AI in India will not solely depend on new innovations but also on how widely and evenly this technology spreads across the country’s industrial economy.
He added that MSMEs are at the center of this transformation, and with the right policies and collaboration between industry and society, AI adoption can enhance competitiveness, secure jobs, and promote inclusive growth.
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