Digital Evolution 57% of Indian MSMEs Embrace AI as a Vital Driver for Scale

MSME : The Indian Micro, Small, and Medium Enterprise (MSME) sector is undergoing a profound digital transformation, as revealed by the Vi Business MSME Growth Insights Study 2026. Contributing over 31% to India’s GDP, these enterprises are increasingly moving beyond basic digitization to build intelligent and future-ready businesses.

Accelerating AI and Digital Maturity:
The study highlights that 57% of surveyed enterprises now view Artificial Intelligence (AI) as a core tool to accelerate business growth, with 25% having already integrated AI into their operational workflows. This shift is reflected in the country’s rising Digital Maturity Index (DMI), which climbed to 60.8 in 2026, up from 58.0 in 2025 and 55.9 in 2023.

The report identifies three primary technology vectors shaping this evolution:

The adoption of new technology vectors is fundamentally reshaping the growth trajectory of Indian MSMEs. The integration of Artificial Intelligence serves as a critical catalyst for enhancing overall productivity and refining decision-making capabilities. Furthermore, SaaS-led collaboration platforms are being increasingly utilized to enable scalable operations through modern workplace tools. Complementing these operational shifts, a significant focus has been placed on building organizational resilience and trust, with 46.3% of Indian MSMEs now actively adopting cyber defence solutions to effectively counter the rising landscape of online threats.

Regional and Sectoral Progress:
Digital adoption is spreading across India, with Telangana (68.3) and Karnataka (65.7) leading the state rankings. Notably, Andhra Pradesh has entered the top 10 rankings for the first time, signaling that digital growth is expanding beyond traditional tech hubs. On the sectoral front, Financial Services emerged as the most digitally mature industry (67.3), while women-led MSMEs have shown remarkable progress, achieving a DMI of 61.6 compared to 60.4 for male-led businesses.

A New Pillar for Sustainable Growth:
To support the long-term sustainability of these enterprises, Vi Business has introduced “Financial Readiness” as the fourth pillar of its ReadyForNext assessment, joining Digital Maturity, Digital Workplace, and Digital Operations. According to M P Sunil Kumar, Chief Enterprise Business Officer at Vodafone Idea Limited, this strategic addition aims to provide an all-inclusive blueprint to help MSMEs evaluate their resilience, secure funding, and scale sustainably in an increasingly competitive global market.

Despite this rapid progress, the study notes that transformation remains uneven. While Southern and Western India continue to dominate, there is a clear need for greater digital enablement in Eastern regions and lagging sectors such as Manufacturing and Agriculture to ensure inclusive growth across India’s vast MSME ecosystem.