Indian MSMEs contribute 31.1% to GDP, 35.4% to manufacturing output and 48.58% to exports, making digital transformation critical for future growth.
Press Information Bureau
KPMG's 2026 report highlights major workforce gaps, with only 10% formally skilled and 45% of core skills expected to change by 2030.
KPMG
AI adoption, ONDC, digital finance and government training schemes can help small businesses improve productivity, reach new buyers and strengthen export competitiveness.
India's micro, small and medium enterprises are the backbone of the national economy. Government data from January 2026 shows that the sector adds about 31.1% to GDP, 35.4% to manufacturing output and 48.58% to exports.
Global buyers now prefer suppliers who can sell online, share order updates quickly and show product quality through data. Many owners still rely on paper records and phone calls, which makes it hard to keep up with this pace. Digital skills have become the foundation for growth, easy credit, and steady export orders.
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According to the PIB backgrounder released in June 2026, MSMEs employ more than 38.9 crore people, which makes them the second largest source of jobs after agriculture. Udyam registrations crossed 8.7 crore by June 2026, showing that millions of small units have entered the formal system.
Formal status brings access to credit, schemes and public tenders. It also creates a digital footprint, which buyers and banks increasingly check before they place an order or approve a loan. A sector of this size can compete in global markets only when its owners and workers learn to use digital tools with confidence.
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KPMG's February 2026 report on MSME talent describes a deep structural gap. Only about 10 % of the MSME workforce has formal skilling, and productivity stands at just 14 % of the level seen in large enterprises.
The report also expects 45 % of core skills to change by 2030. Weak digital readiness means that a clerk may not read a dashboard, a supervisor may not log quality data and an owner may not understand an online contract. These gaps slow delivery and raise costs. Global buyers compare suppliers on speed and reliability, so every delay reduces the chance of a repeat order.
| Indicator | Figure | Source |
|---|---|---|
| Share of GDP | 31.1 % | PIB |
| Share of manufacturing output | 35.4 % | PIB |
| Share of exports | 48.58 % | PIB |
| Udyam registrations | Over 8.7 crore | PIB |
| Workforce with formal skilling | About 10 % | KPMG |
| Productivity against large firms | 14 % | KPMG |
| Core skills expected to change by 2030 | 45 % | KPMG |
Ecommerce platforms and the Open Network for Digital Commerce allow a small manufacturer in a district town to reach buyers in other states and countries. KPMG lists ONDC-ready market capability and digital trade skills among its six talent priorities for MSMEs.
A firm needs to know how to list products, write clear descriptions, handle digital payments, manage returns and read customer data. Without these skills, a platform offers little help. With them, a small unit can build its own brand, set better prices and reduce its reliance on a single middleman.
Artificial intelligence is entering Indian manufacturing, and MSMEs that act early can gain a great deal. KPMG places AI-assisted decision-making, data interpretation and digital literacy among the top skills for 2030. In practice, this can mean sensors that flag a machine fault before production stops, software that forecasts demand, or cameras that check product quality.
Each tool can save material and time. Workers must still know how to read the output and act on it. A firm that trains its team on such tools can cut waste and meet the strict quality demands of export buyers.
Credit access is closely tied to digital records. The PIB notes that the digital Credit Assessment Model is widening access to formal finance, and the guarantee ceiling under CGTMSE has been raised from Rs. 5 crore to Rs. 10 crore for larger collateral-free support.
Lenders trust firms that keep clean digital books, GST filings and transaction trails. Export buyers also ask for proof of quality, safety and environmental practice. KPMG expects green skills to grow by 40 % in job descriptions by 2030, so digital reporting of sustainability data will soon be a routine part of winning orders.
Support is already available. Under PM Vishwakarma, over 24 lakh artisans have completed basic skill training and over 7.91 lakh have been digitally enabled. The Technology Centres network has 18 centres, with 20 new centres and 100 Extension Centres being developed.
More than 6.68 lakh enterprises have earned ZED certification under the MSME Champions Scheme. Smt. Villi, a basket maker in Nagaland, raised her monthly income by about 40 % to nearly Rs. 15,000 after skill training and a collateral-free loan. Such results show that skills and finance work best together.
Change does not need a large budget, and small steps taken in the right order can build strong habits across a team.
Begin with digital payments, accounting software and GST filing.
Train one or two staff members to manage online listings and customer queries.
Join a cluster or industry group to share the cost of training.
Use schemes such as PM Vishwakarma, ZED and LEAN to lower expenses.
Track simple data every week, including orders, delays and defects.
Digital skills can help an Indian MSME grow from a local supplier into a trusted global partner. The sector already supports a large share of the country's GDP, jobs and exports, and the government offers many schemes to help it grow.
Now owners, training bodies and industry groups need to work together with steady effort. Firms that train their people to use data, online markets and simple AI tools will get better orders and easier access to credit. Firms that wait will find it harder each year to catch up with global rivals.
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1. Why are digital skills important for MSMEs in India?
Digital skills help MSMEs manage accounts, accept online payments, track orders and reach new customers. They also improve business efficiency, support formal credit applications and help small enterprises meet the changing requirements of domestic and international buyers.
2. How many MSMEs are registered in India in 2026?
According to PIB, Udyam and Udyam Assist registrations crossed 8.7 crore in June 2026. A later government update reported approximately 9.78 crore registrations as of October 6, 2026, reflecting continued formalisation.
3. How can AI help small businesses and MSMEs in India?
AI can help MSMEs forecast demand, identify machine faults, monitor product quality and reduce production waste. KPMG's February 2026 report identifies AI-assisted decision-making, data interpretation and digital literacy as important workforce skills for the coming years.
4. Which government schemes support digital skills and MSME development in India?
PM Vishwakarma, MSME Champions, ZED certification and LEAN initiatives support skill development, quality improvement and business competitiveness. These programmes can help eligible enterprises strengthen operations, improve product standards and build capabilities for expanding markets.
5. How do digital skills help Indian MSMEs enter global markets?
Digital skills help businesses create online product listings, manage international customer enquiries, process digital payments and track orders. They also support quality documentation and compliance reporting, helping Indian MSMEs build buyer confidence and compete in global supply chains.