Digital adoption helps nearly 60% of MSMEs achieve double-digit revenue growth
AI expected to unlock up to 30-35% improvement in profitability for businesses
Google and the India SME Forum have released a new report titled The Google Dividend: Measuring Digital Commerce’s Contribution to India’s Economic Future, examining how digital technologies are reshaping India’s commerce ecosystem and driving growth among small and medium enterprises. Based on a primary survey of 3,249 MSMEs and macroeconomic analysis, the report explores the impact of digital tools on market access, productivity and business performance.
The findings come at a time when consumer purchasing journeys are becoming increasingly fragmented and digital-first, influenced by personalised experiences, creator-led content, vernacular interfaces and always-on engagement. At the same time, Indian businesses, particularly MSMEs, are accelerating the adoption of digital and AI-powered solutions to improve efficiency and competitiveness.
According to the report, advanced AI workflows and agentic systems have the potential to automate business processes, optimise supply chains and deliver profitability improvements of 30–35% for MSMEs, helping enterprises overcome resource constraints and participate more effectively in domestic and global value chains.
Key insights from the report on digital adoption and AI:
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Market expansion: 66% of surveyed MSMEs reported expanded market access, while 58% saw improved customer acquisition.
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Revenue acceleration: Nearly 60% achieved double-digit revenue increases, while the strategic adoption of AI is projected to unlock an average 30–35% improvement in overall business profitability.
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Cost & production efficiencies: 78% experienced a notable drop in customer acquisition costs, and early AI integration pilots show the potential to reduce operational costs by 20–30%.
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Return on Ad spend: 54% of respondents achieved strong returns of at least 2x to 3x gains, with top performers hitting up to 5x on ad spend.
Beyond individual enterprise growth, the report also highlights the macroeconomic footprint of this digital shift – MSME digital advertising activity is associated with approximately Rs 49,700 crore in economy-wide output and Rs 32,300 crore in Gross Value Added (GVA), representing the net economic value created after accounting for intermediate consumption. The digital surge is also making a growing contribution to public finances, with estimated GST collections rising by more than two-thirds over the past two years to reach Rs 6,534 crore in 2025.
At the launch of the report, a message from Sushri Shobha Karandlaje, Minister of State for MSME and Labour & Employment, was read out: “The true depth of our economic progress is found in the aspirations of millions of small-scale enterprises, artisans, and entrepreneurs spanning every corner of India. Technology is reshaping grassroots commerce, allowing a business in any district to command visibility and engage consumers directly. This democratization ensures that market exposure is accessible to all, irrespective of geographic location or capital size.
“Under the leadership of Hon’ble Prime Minister Shri Narendra Modi, the Ministry of MSME remains committed to improving access to finance and markets, promoting formalisation, strengthening skilling, and encouraging technology adoption through the Udyam ecosystem and a range of schemes and initiatives.
“As we work toward a future-ready economy under the vision of Viksit Bharat 2047, robust digital tools, particularly AI adoption, can help micro and small enterprises expand their commercial horizons, accelerate formalization, and drive sustainable growth. I congratulate Google India and the India SME Forum on ‘The Google Dividend’ report, which is a valuable, data-rich look at how digital adoption is powering India’s MSME sector.”
Vinod Kumar, President, India SME Forum, said: “The long-term trajectory of India’s digital economy will depend not only on the pace of technological advancement, but also on the extent to which MSMEs are able to absorb and deploy these capabilities productively. For many small businesses, constraints related to information asymmetries, managerial bandwidth and access to specialised capabilities can limit their ability to scale and compete effectively. The findings of this report suggest that digital adoption and the growing accessibility of artificial intelligence can help narrow some of these structural disadvantages.”
Vidhya Srinivasan, VP / GM, Ads & Commerce, Google, said: “India’s digital maturity has unlocked new opportunities for small businesses. Our AI-powered tools have helped millions of small businesses reach new customers on Google and convert real-time consumer interest into growth. Looking ahead, agentic AI will actively work on a business’ behalf to connect them with ready buyers, predict hyper-local demand shifts, and win new customers at the exact moment of intent.”
Agentic AI is expected to play a growing role in shaping customer engagement, informing decisions, and streamlining operations. The emergence of agentic commerce could further expand these possibilities, enabling businesses to automate repetitive tasks, respond more dynamically to changing conditions, and unlock new efficiencies.
AI can also power front-end personalization and automated product cataloging, which when paired with digital analytics tools, has been shown to deliver 23% higher conversions, enhancing discoverability and precision customer acquisition. Across functions such as merchandising, sourcing, and supply chains, AI agents help businesses simplify workflows and save time, driving 15-20% productivity uplifts across the enterprise base.
The report reinforces the importance of enabling MSMEs to access and productively deploy digital technologies and AI as India’s digital economy evolves, given their potential to drive productivity improvements and support more inclusive growth outcomes.
