India’s MSME sector holds the key to the country’s inclusive and sustainable socio-economic recovery. Despite being walloped by pandemic-induced disruptions, the aspiration to 'Make in India’ and emerge as a $5 trillion economy by 2025 continues to rest squarely on its able shoulders. Fortunately, the wave of Artificial Intelligence and Machine Learning revolution (AI/ML) sweeping across the globe, has made a noticeable landfall on the Indian MSME shores. How can the country’s mid-market players seize the moment to claim a sizable chunk of the $957 billion pie which research estimates AI/ML will add to Indian GDP by 2035?
Mainstreaming of AI into India’s MSME dynamics
The last 24 months have been a sum of contrasts. Businesses, irrespective of their size, hit a rough patch and MSMEs were left to bear the brunt of an acute economic slowdown. Nevertheless, the period also witnessed the crystallization of the National Vision for India’s Techade with emphasis on next-gen technologies like AI/ML. For instance, in October 2020, C-DAC announced the development of India’s fastest supercomputer PARAM SIDDHI AI (HPC-AI), to deliver a cognitive computing platform for startups and MSMEs, alongside the academia, science and engineering community. Further the Ministry of MSME, GOI, has embedded AI & ML into its Single Window System, CHAMPION, for harnessing real-time insights on the persisting MSME issues.
The message from the top is loud and clear! The need to build a vibrant, tech-driven MSME ecosystem in the country and encourage a greater infusion of cognitive-assists into the building blocks of the national economy, allowing them to withstand and thrive amidst future uncertainties. Its aspirations are not misplaced, as today, the AI technology curve is at an inflection point, democratizing business adoption. As the myth of AI and ML being the reserved turf for cash-rich corporations implodes, the proliferation of Digital Marketplaces and pay-per-usage models are making it easier for the Indian MSMEs to power a broad spectrum of functions and future-proof business interests.
Redefining marketing and customer engagement
One of the striking benefits of AI is that it allows the assimilation of intuition with skills, leveling the playing field for the resource-crunched MSMEs. For instance, bypassing the need for elaborate market research engagements, AI platforms can help a business to harness market and social-media intelligence at scale and analyze buyer persona in-depth, revealing new opportunities. Further in a demographically diverse country like India AI tools can help MSMEs to drive tailored engagement strategies by understanding customer demands and defining purchase patterns. Here, AI based conversational interfaces can proactively resolve customer queries, and live feedback analysis by ML models can deliver insights to improve customer lifecycle management at speed.
Optimizing credit access and financial management
Indian MSMEs are severely credit-starved. Currently, there are over 50 million businesses with no access to formal financing, undermining their growth. Alternate credit-scoring models, driven by AI engines and running on datasets, other than those used in conventional underwriting, can improve credit access for new-to-credit and thin-file applicants. Also, AI powered credit platforms can lead a business to the right lender, matching its requirements. However, AI can help MSMEs not only to borrow at convenience but also to manage their expenses better. While traditional business models come short in quantifying future operational costs, AI assisted working capital management can analyze the demand cycles to forecast such overheads with high reliability.
Delivering a sharper operational edge
On the operational front, AI allows MSMEs to drive non-linear growth by accelerating iterative workloads with intelligent automation and channelizing valuable HR bandwidth into more strategically rewarding roles. For instance, this auto ancillary manufacturer in Jamshedpur has boosted productivity by 40% using collaborative robots. With AI, MSMEs can replicate such success across their value chain from procurement, manufacturing, waste management, shipping, distribution and after-sales services. Additionally, the use of Natural Language Processing (NLP) and Deep Learning techniques at each leg, to assist human operators can dramatically reduce errors, allowing MSMEs to enforce much improved quality control over the outcomes.
Data: underscoring AI implementation success
Nevertheless, to build a solid foundation for AI, Indian MSMEs will have to take up high-quality data capture in mission mode. Efforts may range from investment in lite to moderate ERP platforms, preservation of machine logs, harnessing IoT device streams to promoting data consciousness within the workforce. While the wheels are already in motion, they need to be accelerated further, finding meaningful solutions to complex AI problem statements. It is pertinent to say that the Indian MSME sector’s tryst with Artificial Intelligence will be defined by its pivot into a data-first culture.