The Indian economy is undergoing rapid formalization and growth, projected to reach USD 4.9 trillion by 2027, driven by a favorable regulatory environment, infrastructure investment, and digitalization efforts. This transition is evident in the rising share of the formal economy, which increased from 48% in 2017 to 60% in 2023, with an expected further increase to 80-85% by 2027. The growth of Micro, Small, and Medium Enterprises (MSMEs) is a crucial component of this transformation, contributing around 30% to India’s GDP. The government’s initiatives, such as the ‘China+1’ policy, have attracted companies to set up manufacturing units, and digital platforms like e-commerce have enabled MSMEs to expand their reach and drive economic growth.

MSMEs in India are seizing the digital opportunity, with a surge in online sales. By 2027, it’s anticipated that 70% of MSMEs will have adopted e-payments, and 5.5-6 million sellers (up from 1.5-2.5 million currently) are expected to sell online, resulting in over 35 million additional jobs. Online selling has proven highly profitable for MSMEs, with net profits increasing by over 15% for 55% of sellers. This rapid adoption is driven by multiple factors, including increased internet penetration, improved payment infrastructure, and the ability to target a larger market.

Selling online offers several advantages for MSMEs beyond increased revenue and profits. These include enhanced customer insights, improved visibility, reduced costs, and better working capital management. MSMEs are increasingly willing to embrace online sales and are expected to be the primary driver of growth in India’s e-retail sector. The report suggests that they could contribute around USD 50 billion to eTailing sales by 2027, outpacing the overall market growth.

To support MSMEs’ digital transition, e-commerce platforms have implemented policies such as lower commissions, seamless onboarding, effective marketing tools, and powerful seller dashboards. These measures are designed to facilitate the integration of MSMEs into the digital economy and harness their potential for sustained growth.

For a comprehensive understanding of the report’s findings and insights, please refer to the full report provided below.