A new India SME Forum report reveals that four in five micro, small and medium enterprises in India see digital procurement as vital to their growth, with a significant shift towards AI-enabled platforms and online sourcing despite current reliance on offline processes.
India’s small business sector is increasingly viewing digital procurement as a practical route to growth, with about four in five micro, small and medium enterprises expecting online purchasing platforms to become important to expansion over the next three years, according to a new India SME Forum report released on Thursday.
The study put the country’s MSME procurement economy at ₹124.9 trillion, underscoring how much spending still sits outside digital systems. Based on a survey of more than 27,000 registered firms and official Udyam registration data, it found that only 30% to 40% of procurement now happens through digital channels, even though more than three-quarters of MSMEs spend between ₹10 lakh and ₹1 crore a month on purchases.
Cost pressure remains the sector’s biggest headache. The report said 55.7% of respondents cited price volatility as their main procurement challenge, followed by the difficulty of dealing with multiple suppliers, payment and credit constraints and the lack of reliable vendors. When choosing digital platforms, firms said GST-compliant invoicing, flexible credit, broader product choice, simpler ordering and faster delivery mattered most.
At the launch of the report, Minister of State for Micro, Small and Medium Enterprises Shobha Karandlaje said digital procurement could help smaller companies cut costs, improve efficiency, strengthen supply chains and reach wider markets. The report also found that 61.5% of MSMEs plan to increase use of digital procurement platforms, while nearly half expect to adopt AI-enabled procurement tools within two years.
The broader picture suggests MSMEs are moving steadily towards technology-led operations. A separate India SME Forum survey highlighted rising use of software automation, digital tools and artificial intelligence as businesses respond to competition, compliance demands and the push for efficiency. Another forum study found that 53.8% of MSMEs have adopted at least one digital tool, while a large share remain offline, pointing to substantial room for further digitisation. The latest procurement report said raw materials and machinery are the categories most likely to shift online, and it ranked Amazon Business highly on price transparency and supplier quality, while naming Moglix as a leader in industrial procurement and embedded finance.
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