India’s MSMEs Go Digital: How E-Commerce Is Powering the Next Growth Wave
India’s micro, small and medium enterprises (MSMEs) are rewriting their growth story—and digitalisation is the plot twist driving the turnaround. Once seen as fragile and informal, today’s MSMEs are proving resilient, adaptive, and increasingly tech-savvy. The latest nationwide survey by the Indian Council for Research on International Economic Relations (ICRIER), covering 2,365 manufacturing MSMEs, shows a sector not merely recovering post-pandemic but actively scaling up through digital adoption, especially via e-commerce platforms.
From Survival Mode to Growth Mode
The survey challenges a long-held narrative: MSMEs are no longer simply struggling to survive. Since 2021, most surveyed firms reported rising sales, improving profit margins, and expanding employment. Roughly half of the enterprises recorded higher turnover and profits in 2023-24 compared to two years earlier. More businesses are also shifting into higher revenue and employment brackets, signaling structural growth rather than temporary recovery.
This performance is particularly visible among enterprises integrated with e-commerce platforms. Firms selling online consistently outperformed non-integrated firms across revenue growth, profitability, and hiring. In fact, more than 90% of integrated firms reported growth in both sales and profit margins after joining online marketplaces. Digital channels have effectively expanded their market reach beyond local boundaries.
Digitalisation: More Than Just Online Sales
The real transformation, however, goes beyond revenue gains. Digital integration is generating what researchers call “second-order benefits”—improvements that strengthen long-term enterprise capability.
Integrated firms report better access to finance, improved business information, and stronger export prospects. Online presence builds transaction histories and data trails that help firms secure loans even without traditional collateral. About half of integrated firms found their digital footprint useful in accessing external finance, while a notable share secured collateral-free loans. This reduces one of MSMEs’ biggest historic barriers: credit access.
Digital adoption is also spurring innovation. Post integration, 62% of firms invested in employee training, while nearly half invested in product research and development. Over 90% introduced new business or operational innovations, from improved production processes to upgraded organisational practices. The result is not just more sales—but better businesses.
MSMEs Go Global via Online Platforms
Perhaps the most striking outcome is digitalisation’s role in opening global markets to small firms. Around 16% of surveyed enterprises currently export, and among export-oriented firms integrated with e-commerce, a staggering 93% rely on online platforms to sell internationally. This includes many micro enterprises that traditionally lacked export networks or resources.
Even firms not yet exporting see potential: about one-fifth believe their products are export-ready, and many acknowledge that e-commerce can help overcome market information and finance constraints that previously blocked global entry.
Challenges Are Evolving
Yet, success brings new challenges. Non-integrated firms still struggle with access to markets and finance, but integrated businesses face different hurdles: managing online operations, handling customer returns, digital marketing, logistics, and hiring skilled staff for e-commerce management. In short, the problem has shifted from entering markets to optimising digital participation.
Additionally, despite digital growth, offline channels remain dominant for many enterprises. Only a minority generate most of their revenue online, meaning the digital journey is still in transition. Scaling adoption will require continued improvements in logistics, payment systems, cybersecurity, and digital skills training.
The Road Ahead: India’s Digital Enterprise Moment
The survey’s message is clear: India’s MSME sector is at a turning point. Digitalisation—particularly e-commerce integration—is helping enterprises overcome long-standing barriers of scale, finance, and market access. With stronger digital infrastructure, skill development programs, and supportive policies, MSMEs can unlock massive employment and productivity gains for the economy.
From resilience to resurgence, India’s small businesses are proving that the future of enterprise development is digital—and the transformation is only getting started.
Reference:
Goyal, T. M., Puri, H., Khanna, R., & Indian Council for Research on International Economic Relations. (2025). Annual Survey of Micro, Small and Medium Enterprises (MSMEs) in India: The role of Digitalisation in Enterprise Development. In Annual Survey of Micro, Small and Medium Enterprises (MSMEs) in India [Report]. Indian Council for Research on International Economic Relations. https://icrier.org/pdf/Annual-Survey-MSMEs_India_2025.pdf
