60% of MSMEs may digitise their business by 2025; VI study

43% of MSMEs plan to increase their overall digitalisation budget by 2025

MUMBAI: Almost 60 per cent of MSMEs plan to digitise their business processes, and 43 per cent plan to increase their digitalisation budget by 2025, according to a study by Vi Business, the enterprise arm of Vi (Vodafone Idea).

Medium, Small, and Micro Enterprises (MSMEs) are the backbone of India’s economy, currently contributing nearly 30 per cent to the country’s GDP, the report said.

There are several studies that suggest MSMEs will boost their GDP contribution to 35-40 per cent by 2027.

Hence, MSMEs must adopt digital transformation to unleash their growth potential and play a pivotal role in making India a Viksit Bharat (a developed economy) by 2047, it said.

The ‘Vi Business ReadyForNext MSME Growth Insights Study’ drew insights from 1.6 lakh respondents across 16 industries.

“In FY 2025, MSMEs are looking to prioritise digitalising business processes (59 per cent) over workspace optimisation (29 per cent), and customer engagement (12 per cent), indicating need for future-proofing business operations and growth. Over 50 per cent of MSMEs focusing on business digitalisation plan to increase their budget,” the report noted.

It also said, “43 per cent of MSMEs plan to increase their overall digitalisation budget by 2025. Sectors with lower Digital Maturity Index (DMI) are particularly inclined to increase their investments reflecting a growing commitment towards digital transformation.”

IT-ITES (information technology and IT-enabled services), financial services and transportation were the top three sectors that emerged as the most digitally matured.

“Digitalisation has a direct positive correlation with the turnover. Further, as the firm size increases, the variation in digital maturity level narrows, indicating that medium to large firms have embraced digitalization and there is scattered digital adoption among micro and small firms,” it said.

During COVID-19, while MSMEs prioritised digitalising their workspaces, the focus has moved on to engaging with their customers digitally in 2024, it said.

“India’s vibrant MSME sector, boasting over 6.3 crore enterprises, is a cornerstone of our nation’s economic strength. These businesses are not just engines of growth, contributing roughly 30 per cent of GDP, but also vital job creators, employing a staggering 11 crore individuals,” said Arvind Nevatia, Chief Enterprise Business Officer, Vodafone Idea Limited.