AI adoption among MSMEs could unlock $500 billion in economic value. A joint report by BCGX and industry body FICCI estimates India’s AI market will reach $17 billion by 2027, with over 80% of enterprises ranking AI among their top three strategic priorities. Yet, less than one-third of the companies across the globe are able to convert the AI investments into sustained financial returns.
The $500 billion MSME opportunity
According to BCGX and FICCI, AI adoption among MSMEs could unlock over $500 billion in economic value, driven by higher productivity, lower costs and improved access to finance.
According to the report, AI-enabled credit assessment and cash flow analytics could lead to 15-20% productivity gains, 20-30% reduction in operating cost and 12-16% lower borrowing costs. Despite this, the report mentions that adoption of AI remains uneven due to low awareness, lack of sector-specific solutions, limited infrastructure and shortages of AI-ready leadership.
To close this gap, the report recommends cluster-based AI adoption labs, frugal and modular AI solutions from startups, and targeted incentives for first-time users.
India today ranks in the top 25% globally on AI readiness, but still lags the US and China in innovation depth and research intensity.
Cracking the AI ‘ROI paradox‘
Despite strong intent, AI spending remains limited. About 44% of executives say AI makes up less than 10% of their overall technology budgets, even as experimentation picks up pace.
“India’s opportunity in AI lies not only in scale, but in inclusion,” said Jyoti Vij, director general of FICCI. “Extending AI adoption across MSMEs, startups and regional ecosystems can drive productivity, create quality jobs and strengthen long-term economic resilience.”
BCGX classifies companies into four AI maturity stages, from ‘AI laggards’ to ‘AI future-built’ firms. Only 5% of companies globally fall into the most advanced category, but these firms significantly outperform peers, posting 1.7 times higher revenue growth, 1.6 times higher EBIT margins, and 3.6 times higher three-year shareholder returns.
India’s innovation paradox
India has over 2,000 AI startups, as per the report. This places the country at the second place after the US by volume. However, India accounts for less than 1% of Global AI patents. The same for the US is 70% and China is at 13%.
Funding remains a major constraint. Private AI investment in India stands at around $1.2 billion, far below $109 billion in the US and $9.3 billion in China. Public funding for AI is estimated at just 0.03% of GDP, the report added.
BCG’s Nipun Kalra, managing director and senior partner, said the next phase of growth would depend on companies designing businesses around AI, rather than treating it as a bolt-on tool. “True value will come from building AI-first organisations and enabling inclusive access to the technology,” he said.
A distinctly Indian AI path
Rather than copying US or Chinese models, the report outlines an India-specific AI strategy centred on affordability, wider access and social impact. Through initiatives such as the IndiaAI Compute Portal, subsidised compute capacity has expanded to over 38,000 GPUs within a year, with usage costs falling below ₹100 per GPU hour, among the lowest globally.
The government-led IndiaAI Mission is also supporting data platforms such as AIKosh, which hosts over 3,000 datasets and 243 models across 20 sectors, the report added. Furthermore, the government has plans to set up 570+ AI and data labs in the Tier-2 and Tier 3 cities, the report added.