World MSME Day 2025: How India’s MSMEs Are Embracing Tech and What’s Holding Them Back

Recognising the vital role of Micro, Small, and Medium Enterprises (MSMEs) in global economies, the United Nations designated June 27 as International MSME Day. This year, the Ministry of MSME is observing the day under the theme “Enhancing the Role of MSMEs as Drivers of Sustainable Growth and Innovation.”

According to a data from PIB, Micro, Small and Medium Enterprises (MSMEs) form the backbone of both the Indian and global economy. In India, they are a key pillar of growth; contributing around 30% to the GDP and over 45% to the country's exports. By fostering entrepreneurship, generating employment and promoting inclusive development, MSMEs continue to drive economic transformation at the grassroots level.

Globally, MSMEs represent the most dominant segment of the business ecosystem, accounting for nearly 90% of enterprises and over 50% of total employment. In India, they hold a similar significance, emerging as the second-largest employer after agriculture.

Against this backdrop, new study by CyberMedia Research (CMR) also presents a timely sense check on India’s MSME sector. According to the study, 67% of Indian MSMEs are now digitally equipped, signalling a significant shift in how small businesses are leveraging technology to grow. These businesses are increasingly using digital tools like ERP, CRM, cloud computing, and even advanced technologies such as AI, IoT, and data analytics to modernise their operations.

Digital Transformation Gaining Traction in MSMEs

CMR’s nationwide survey, which covered over 400 MSMEs across IT, manufacturing, education, and retail sectors, found that one in three MSMEs reported tangible improvements in business growth and operational efficiency due to digital adoption.

The findings suggest that going digital is no longer optional—it’s essential. From using WhatsApp groups for support to engaging in LinkedIn and X (formerly Twitter) communities, MSMEs are actively seeking out digital advisory platforms to navigate the tech landscape. In fact, 62% of MSMEs said they rely on online communities and forums for digital guidance.

While 43% have achieved basic digital maturity through tools like ERP and cloud, only 23% have moved into advanced digital territory with AI and analytics. This indicates that while progress is real, there's still a long road ahead for deep digital transformation.

What’ is Holding MSMEs Back?

Let's unpack some of the challenges faced by MSMEs in terms of digital adoption. Despite the growth in digital confidence, the CMR study uncovered three major challenges preventing many MSMEs from advancing:

• 84% of digitally hesitant MSMEs struggle to see clear value in technology investments
• 81% express concerns over data security
• 56% cite a lack of technical skills to adopt modern solutions

This gap underscores the need for targeted, contextual, and easy-to-use digital interventions.

Expert Voices: Decoding the Digital Challenges and Solutions

To better understand the digital journey of MSMEs, industry leaders- who are deeply engaged with small businesses, shared their insights and recommendations.

Rahul Sharma, VP – Sales, Salesforce India

“India’s MSMEs are engines of growth, innovation, and employment. With AI and automation now more accessible than ever, small businesses have an opportunity to transform how they work. Tools like Slack are already empowering them to centralise communication, streamline everyday tasks, and collaborate with agility. Our no-code workflow builder, integrations with over 2,600 apps, and trusted AI agents like Agentforce are helping MSMEs do more with less. These capabilities are no longer just nice-to-have—they’re becoming essential for staying resilient, productive, and future-ready in today’s fast-evolving digital economy.”

Pravir Dahiya, CTO, Tata Teleservices

“One of the most pressing tech challenges MSMEs face is the absence of a connected digital infrastructure. Many operate in silos—CRM on one tool, billing on another, communication elsewhere—leading to inefficiencies and missed opportunities. The way forward is through cloud-first, AI-enabled platforms that are scalable and cost-effective. Solutions like Smartflo UCaaS centralise operations, automate workflows, and support business continuity. We’ve seen how even basic integration can dramatically improve agility and decision-making, especially when businesses have limited IT resources.”

Yashashree Parab, Chief Sales Officer, Orient Technologies

“As MSMEs shift towards digital payments, cloud platforms, and mobile apps, they’re also increasingly exposed to cybersecurity risks and compliance challenges, often without the internal expertise to manage them. What they need isn’t just more tools, but integrated, managed solutions that grow with them. That’s where TOSS- Technology Outsourcing - can make a difference. It lets MSMEs outsource their IT backbone entirely, from infrastructure and applications to security and support. It’s not just cost-effective—it frees up leadership to focus on growth, innovation, and customer success.”

Sujit Patel, CEO & MD, SCS Tech India

“Many small businesses still rely on paper-based processes, Excel sheets, or disconnected apps for managing sales, inventory, or customer data. This slows down operations and creates blind spots. To solve this, we’ve developed a mobile-first, no-code ‘Business-in-a-Box’ platform tailored for MSMEs. It supports regional languages, runs on low-data environments, and includes billing, CRM, payments, and basic analytics in one plug-and-play interface. We’ve seen firsthand that when MSMEs are empowered with easy-to-use tech, they can focus less on firefighting and more on scaling.”

Nishant Rathi, Founder & Director, NeoSOFT

“A real challenge for MSMEs is working with multiple disjointed systems, For instance, one for accounting, another for inventory, and yet another for customer service. While each tool may solve an immediate need, the lack of integration creates data silos, delays in decision-making, and inefficiencies that hurt business credibility. If MSMEs had access to a unified, AI-driven digital platform, one that can automate processes, analyse data in real-time, and guide decisions, they not only work smarter but also position themselves for sustainable, long-term growth without the complexity of juggling different systems.”

Arun Kumar, Regional Vice President, ManageEngine, Zoho Corp

“Most MSMEs in India operate with tight bandwidth and limited technical teams. They often treat technology as a reactive fix rather than a strategic enabler. This piecemeal adoption leads to fragmented data and underutilised systems. The answer lies in adopting integrated, end-to-end platforms that simplify management, enhance visibility, and generate insights from day one. With the right systems in place, MSMEs can not only scale faster but also stay compliant and competitive.”

Gaurav Shisodia, Vice President, Payoneer India

“India’s MSMEs contribute massively to GDP and exports, yet many struggle with cash flow due to long payment cycles, especially in international markets. Our SMB Ambitions Barometer Report showed that 26% of Indian business owners cited delayed payments as a top challenge when expanding globally. By improving access to predictable, fast cross-border payments, we can help these businesses reinvest in growth, improve liquidity, and build confidence as they expand to new geographies.”

Mukul Goyal, Co-Founder, Stratefix Consulting

A key tech challenge for small businesses in India is low digital adoption—driven by resistance to change, high implementation costs, and poor digital infrastructure, especially in rural areas. Even when online, frequent compliance tasks like GST invoicing and navigating multiple portals create technostress, with 43% of MSME employees losing productive time. A unified, low-cost digital platform integrating invoicing, marketplace access via ONDC, analytics, and embedded financing could ease this burden. It would cut switch-over costs, reduce tech fatigue, and help MSMEs tap into the growth benefits already seen by 68% of digitally equipped peers.

Vijayant Rai, Managing Director- India, Snowflake

As India moves towards its vision of becoming a $5 trillion economy, MSMEs play a key role in this sustainable economic growth. According to a recent report by Niti Aayog, MSMEs contribute approximately 29% to India’s GDP and employ over 60% of the workforce.  This presents an immense opportunity for MSMEs to help accelerate the Viksit Bharat vision by making technology their key enabler, deeply intertwined with our digital economy's growth and Digital India's ambitions.  

We believe that Data and AI will be key cornerstones of innovations for MSMEs. As businesses continue to navigate from AI tools to AI agents, the sector has a big opportunity, as integrating AI isn't about overhauling legacy systems for them; it’s about building intelligently from the beginning. A digital-first approach and a sound data strategy can help small businesses embed AI to drive data-driven decision-making, enhance operational efficiency,  and create innovative solutions catering to the various market and customer requirements on a global scale. To stay competitive and drive growth, MSMEs must invest in cloud-based platforms that provide access to diverse data sets, AI, and application workloads at scale. As the sector grows, investment in strong security and governance, and skilling their team to be AI-ready becomes non-negotiable. Snowflake remains a crucial partner for MSMEs and is committed to providing this industry with the tools they need to transform their data into their most valuable asset, accelerating their journey towards an AI-enabled growth in India and globally.

Narendra Sen, Founder and CEO, RackBank & NeevCloud

One real tech challenge small businesses in India face daily is the lack of affordable, scalable, and secure digital infrastructure. Global cloud and AI services are often priced out of reach, and localized, easy-to-use platforms are limited. Many MSMEs also struggle with secure data storage, compliance, and simply are not aware of scalable tech tailored to their needs. 

If I were to recommend one digital solution to accelerate MSME growth, it would be a full-stack AI-powered SaaS ecosystem. India’s MSMEs require more than infrastructure; they need intelligent, cost-effective tools tailored to their unique operational needs. Existing global SaaS offerings are often expensive and ill-suited to local business contexts. At NeevCloud, we have built India’s first AI cloud infrastructure, powered by high-performance GPUs and hosted in sustainable datacentres. 

Harsha Solanki, VP GM Asia, Infobip

MSMEs account for approximately 29% of India's GDP and employ over 60% of the workforce across various sectors, making them a crucial driver for creating jobs in the nation. They are essential for realising the vision of Atmanirbhar Bharat and contributing significantly to our nation's economic prosperity. At Infobip, we are committed to empowering MSMEs with business ready communication solutions. Through our CPaaS offerings, MSMEs can easily integrate real-time voice and messaging capabilities to their applications – without the need to build and maintain these functionalities from scratch and without the burden of managing backend infrastructure. 

Niraj Kumar, CTO, Onix

On MSME Day, Onix celebrates the resilience and innovation of India’s Small and Medium Enterprises. Our AI-first approach to cloud and data is built to be scalable, secure, and result-driven, making us a strong partner for SMEs looking to modernize, leverage AI, and grow. At Onix, we are making enterprise-grade tech accessible so SMEs can lead in a data-driven world."

Vishal Salvi, CEO, Quick Heal Technologies 

MSMEs contribute 30% to India’s GDP and employ over 110 million people, playing an important role in driving innovation and economic growth. Yet, limited resources and cybersecurity awareness leave them vulnerable to evolving cyber threats and frauds. At Quick Heal Technologies Limited, we understand this and have made it our goal to make cyber safety a fundamental right for all. The entrepreneurial spirit of MSMEs mirrors our own journey at Quick Heal Technologies from humble beginnings to becoming a trusted leader in cybersecurity. Just as MSMEs adapt and evolve to meet market demands, we continuously innovate to address emerging cyber threats that could potentially disrupt their progress. We envision a cyber-secure ecosystem where every MSME can thrive fearlessly in the digital age, contributing to our nation's prosperity and global competitiveness."

Looking Ahead: Structured Support Is the Need of the Hour

What is the road ahead? For instance, the CMR’s study reaffirms that digital transformation is underway among India’s small businesses, but it’s not uniformly distributed. Many MSMEs still lack the tools, trust, or technical know-how to fully embrace the digital shift.

As India celebrates MSME Day 2025, it’s clear that the next leap will depend on affordable, contextual, and outcome-driven digital support. Logistics, in particular, will be a critical lever. “India’s MSMEs are the backbone of the nation’s economy, driving employment, innovation, and exports,” says Ketan Kulkarni, Managing Director & CEO, Gati Express and Supply Chain. “At Allcargo Gati, we recognise the vital role logistics plays in strengthening MSME competitiveness. Our approach goes beyond transportation, we deliver integrated, tech-enabled, and sustainable logistics solutions tailored to the unique needs of MSMEs.”

With the right partners, platforms, and policy backing, India’s MSMEs can truly become the backbone of a sustainable and innovation-led economy.