India’s small and medium-sized enterprises (MSMEs) are the backbone of the country’s economy, employing over 500 million people and contributing significantly to the GDP. However, despite their importance, MSMEs face numerous challenges, including low productivity and high operational costs. In a recent tweet, Arjun Malhotra, founding partner at BadCapitalVC, highlighted the potential of artificial intelligence (AI) in transforming the MSME landscape in India.
The Daily Grind of MSME Owners
Rajesh, a textile factory owner in Surat, is a perfect example of the daily challenges faced by MSME owners. By 9 a.m., he has already dealt with three different crises – a delayed fabric delivery, a missing worker, and an irate customer. This is not an isolated incident; millions of MSME owners across India face similar challenges every day. The problem is not a lack of ambition or workforce, but rather a system design issue.
The Need for AI in MSMEs
Malhotra believes that AI can unlock the next phase of growth for Indian businesses. With the help of AI, MSMEs can automate routine tasks, make data-driven decisions, and improve operational efficiency. This can lead to increased productivity, reduced costs, and improved customer satisfaction.
India’s Dual Advantage
India has a unique advantage in the AI landscape – affordability and talent depth. The country has a large pool of skilled professionals, and AI solutions can be developed at a lower cost compared to developed economies. This makes India an attractive destination for global firms looking to set up AI-based operations.
The IndiaAI Mission
The Indian government has launched the IndiaAI Mission to promote AI adoption across various sectors. The mission aims to develop AI capabilities in areas such as healthcare, education, and infrastructure. With initiatives like this, India’s AI momentum is set to grow, and MSMEs can benefit from the increased adoption of AI solutions.
Conclusion
In conclusion, AI has the potential to transform the MSME landscape in India. By embracing AI, MSMEs can improve operational efficiency, increase productivity, and reduce costs. The Indian government’s initiatives to promote AI adoption are a positive step towards realizing this potential. As Arjun Malhotra said, ‘The problem isn’t ambition or workforce. It’s system design.’ With the right system design and AI solutions, India’s MSMEs can unlock their true potential and contribute significantly to the country’s economic growth.
Originally published on https://www.businesstoday.in/latest/trends/story/500-mn-jobs-low-output-why-badcapitals-arjun-malhotra-feels-ai-is-the-best-fix-for-indian-msmes-486471-2025-07-26
Originally published on https://www.businesstoday.in/latest/trends/story/500-mn-jobs-low-output-why-badcapitals-arjun-malhotra-feels-ai-is-the-best-fix-for-indian-msmes-486471-2025-07-26
