Empowering MSMEs: Digital transformation driving India's economic growth

Every year, MSME Day is celebrated to mark an opportunity to acknowledge and appreciate the resilience, innovation, and impact of Micro, Small, and Medium Enterprises (MSMEs) in India. With over 6 crore MSMEs contributing nearly 30% to the national GDP and playing a key role in employment generation, the sector remains central to India’s economic fabric. Today, MSMEs are rapidly transitioning towards digital transformation, adopting technologies such as AI, cloud, IoT, and analytics to improve operational efficiency, market reach, and competitiveness. This shift is not only enhancing productivity but also aligning MSMEs with the government’s vision of a self-reliant and digitally empowered Bharat. As India accelerates towards becoming a USD 5 trillion economy, MSMEs—supported by forward-looking policies and tech innovation—are set to play an even more pivotal role in this journey.

MSME Day 2025 - IT Association Leaders and Industry Experts shared varied insights and opinions

On MSME Day, we celebrate the passion, resilience, and innovation of India’s MSME sector—the true backbone of our economy. From job creation to digital adoption, MSMEs are driving inclusive growth across the nation. As a tech-enabled MSME ourselves, Unistal Systems, along with our sister concerns like IndiaIT360, is playing a vital role in strengthening the MSME ecosystem and contributing to a self-reliant India. As we move forward, it’s crucial to equip this sector with the right tools, policies, and support to unlock its full potential. Let’s continue to champion our MSMEs—they are the real catalysts of India’s growth story.

— Alok Gupta, President, PCAIT and MD, Unistal Systems

"Micro, Small, and Medium Enterprises are truly the backbone of our economy, making a substantial contribution to India's overall economic growth. India's prioritisation of these small industries has been instrumental in creating a vast number of employment opportunities across the country, which in turn leads to greater financial inclusion and stability for many.

The government's proactive support for MSME development, especially in the IT and electronics sectors, is commendable. Initiatives such as the Vibrant Gujarat Global Summit are excellent examples of how MSMEs are being encouraged and empowered under the "Made in India" and "Make in India" programs. These efforts are crucial for fostering innovation, boosting domestic production, and ultimately driving the nation's progress."

• Alok Ghelani, President, FITAG

"MSME industries, which include services, are a major source of import substitution & employment generation & are the true torchbearers of our great country to Viksit Bharat in the coming times.

MSMEs contribute nearly 30 per cent to our GDP, with the service sector contributing 24 per cent and the balance of 6 per cent being manufacturing/assembling.

Job Creation in the unorganised space is really provided by MSMEs owing to their being less automated or systems-driven. Thus, they are the backbone of our economy, as they provide the required resilience to our economy, as has been witnessed during the recent global meltdowns owing to multiple reasons."

• Puneet Singhal, President, CMDA

“India’s Micro, Small and Medium Enterprises (MSME), over 5.93 crore strong, form the backbone of the country’s economy, contributing nearly 30% of the GDP. But for many small businesses, the challenge remains the same: how to do more with less, serve customers better, and stay competitive in a fast-evolving market.

The rise of AI is beginning to change this story. Today, AI-powered tools, including AI agents that act as a limitless, always-on digital labour force, make it easier for MSMEs to automate routine work, gain insights, and operate more efficiently without the need for large IT investments.

In today’s fast-paced environment, agility is crucial for MSMEs. AI and automation can help centralise information, streamline workflows, and enable seamless hybrid collaboration, fostering a work culture built for speed and flexibility. By embracing AI and building a digital-first work culture, small businesses can unlock new levels of productivity, deliver better customer experiences, and drive long-term growth.”

• Rahul Sharma, Vice President – Sales, Salesforce India

“India’s MSMEs are the real engines of our economy, and it’s inspiring to see how quickly they’re embracing digital tools to stay competitive and future-ready. Whether it’s using the cloud, automating workflows, or experimenting with AI, these businesses are proving that you don’t have to be big to think big. At edForce, we believe digital transformation starts with people. That’s why we’re focused on helping MSMEs upskill their teams, so they have the confidence and capabilities to innovate and grow. On MSME Day, we celebrate their grit, adaptability, and the huge role they play in shaping a digitally empowered India.”

• Ravi Kaklasaria, Co-founder & CEO of edForce

"India’s 60 million MSMEs are entering a pivotal phase of digital transformation, with 67% now leveraging core and advanced technologies such as ERP, CRM, AI, and IoT to enhance business outcomes and competitiveness.

The current scenario:

• Investment Momentum: 43% of MSMEs plan to increase their digitalisation budgets in 2025, with sectors like IT-ITES, financial services, and transportation leading in digital maturity.

• Operational Impact: Digitalisation directly correlates with improved turnover and productivity, while cloud, IoT, and analytics adoption are boosting customer engagement and market reach.

• Challenges: Knowledge gaps, cybersecurity, and financial constraints remain barriers, but targeted advisory platforms and peer networks are helping bridge these divides.

• Future Outlook: Embracing the workforce remains crucial to capitalise on this change. Tech-like AI-powered employee engagement solutions like Umwelt.ai help MSMEs unlock hidden potential, reduce attrition, and build cultures that thrive in digital change and accelerate innovation, positioning them for leadership in India’s USD 5 trillion economy journey.

For MSMEs, the imperative is clear: invest in digital intelligence and foster a culture of continuous learning to unlock sustained growth and resilience."

• Vishal Chopra, Founder and CEO of Umwelt.AI

The Indian MSME sector is the country's economic backbone, and its digitalisation is not a mere upgrade; it's a national necessity. When more and more small and medium businesses take up digital payments, credit products, and financial platforms, they're opening up new avenues for efficiency, transparency, and growth. On the ground, we're seeing the effect directly where digital finance empowers local businesspersons, be it the shopkeepers from the Tier-2 cities or the service providers in remote locations, to grow, gain access to credit, and become more stable. India's future economy is one which belongs to enabling such businesses through simplified, secured, and inclusive digital tools. Supporting MSMEs in their digitalisation process is not just good business; it's the manner through which we build a sturdy, self-sustainable Bharat.

• Sai Krishna Musunuru, Director & CEO of Payinstacard

Conclusion - MSMEs driving the digital transformation

The digital transformation of India’s MSME sector is no longer a distant goal—it is unfolding in real time. From technology adoption and workforce upskilling to enhanced access to finance and market opportunities, MSMEs are proving to be agile, resilient, and future-ready. As echoed by industry voices, enabling this sector with the right tools, digital infrastructure, and ecosystem support is essential for long-term economic progress. On this MSME Day, recognising and investing in the digital potential of small businesses is more than a celebration—it is a commitment to building an inclusive and robust economy for the future.

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