Project Overview

Micro, Small, and Medium Enterprises (MSMEs) are central to India’s manufacturing economy, contributing 31.1% of GDP, 35.4% of manufacturing output, and nearly 48.6% of exports. Despite their scale and importance, the adoption of advanced technologies such as Artificial Intelligence (AI) remains limited across MSME manufacturing units.

To address this gap, IndiaAI Mission at Ministry of Electronics and Information Technology (MeitY) has commissioned a study to develop a practical and operationally grounded roadmap for accelerating AI adoption in manufacturing MSMEs across Textiles, Pharmaceuticals and Medtech, and Electronics.  The study is being implemented by the National Institute of Smart Governance (NISG) in partnership with Athena Infonomics, with strategic engagement from the Ministry of MSME, Ministry of Textiles, and Department of Pharmaceuticals, Ministry of Chemicals and Fertilisers.

The study focuses on the sectors where MSMEs play a critical role in national manufacturing output and exports and seeks to identify actionable pathways for integrating AI into everyday manufacturing operations.

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Project Objectives

The project aims to develop an operational, evidence-based roadmap to accelerate AI adoption across manufacturing MSMEs. Specifically, the study seeks to:

1. Identify high-impact AI opportunities by examining sector-specific manufacturing processes to pinpoint practical AI use cases that address MSMEs’ key operational challenges to improve productivity, cost efficiency, and quality within MSME manufacturing units.
2. Translate priority AI opportunities into MSME-ready adoption pathways by specifying the technical, organisational, and operational requirements needed for feasible and successful deployment.
3. Generate insights that can support evidence-based policy and ecosystem recommendations that can enable scalable AI adoption across industrial clusters.

The study recognises that AI should complement existing manufacturing processes and organisational improvements, rather than being positioned as a standalone technological solution.

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Approach

The study follows a three-phase approach to identify AI opportunities in MSME manufacturing and translate them into practical adoption pathways. It combines field-based research, ecosystem analysis, and stakeholder consultations to ensure that the recommendations are grounded in real operational conditions.

Key phases of the study design include:

Discovery

Map sector-specific manufacturing value chains, conduct stakeholder consultations/expert interviews, identify operational challenges and pain points, and assess current levels of digital/technology adoption in MSMEs.

Design

Translate validated pain points into AI use cases aligned with MSME operational needs, apply design principles to keep solutions practical and scalable, assess feasibility/readiness, and prioritise interventions based on impact and implementability.

Diffusion

Develop AI adoption frameworks and implementation pathways, identify ecosystem support mechanisms, formulate policy recommendations/strategic interventions, and lay out roadmaps to scale AI adoption across MSME sectors.

Athena’s Role

Athena Infonomics is working with the National Institute of Smart Government (NISG) to design and implement the research and analysis underpinning the study.

Athena’s role includes:

1. Designing the research framework and field immersion strategy
2. Conducting factory-level assessments and stakeholder consultations
3. Identifying and prioritising AI-enabled use cases relevant to MSME manufacturing
4. Assessing data, infrastructure, and operational requirements for implementation
5. Developing policy and ecosystem recommendations to support AI adoption at scale

Athena also supports the translation of field insights into practical implementation archetypes and adoption pathways that can guide policymakers, industry stakeholders, and technology providers.

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Expected Outcomes

The study will deliver a problem-first, field-validated roadmap to accelerate AI adoption in manufacturing MSMEs—grounded in evidence from shop-floor realities and designed to convert priority AI opportunities into scalable, low-risk adoption pathways.

Key outcomes will include:

• A validated and prioritised set of AI use cases and problem statements, grounded in MSME operations and focused on practical adoption.
• Implementation pathways and archetypes that translate high-impact opportunities into feasible adoption steps suited to MSME capabilities and constraints.
• Clear guidance on the minimum data, instrumentation, and operational requirements needed to implement priority use cases, alongside the type of feasibility and cost–benefit thinking required for deployment decisions.
• Practical insights on procurement and financing pathways—including approaches that reduce adoption risk through more workable financing and procurement models for MSMEs.
• A structured set of policy-relevant outputs for government and ecosystem actors, including enabling levers, along with identification of ecosystem gaps and scaling opportunities.

By aligning policy priorities, technological capabilities, and the operational realities of MSMEs, the study aims to support scalable AI adoption that enhances productivity, competitiveness, and resilience across India’s manufacturing MSMEs.

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Download the Study Report!

For more details, reach out to Alok Gupta.