How AI is levelling the playing field for India's small businesses

Just a few years ago, the financial landscape for India's small businesses was fragmented and manual. Tasks such as cash flow management, customer analysis, and financial forecasting were tedious and time-consuming.

Today, AI-powered tools are transforming this reality. Automation, deep insights, and real-time decision support are making high-level financial management accessible even to the smallest enterprises and mom-and-pop businesses. What was once the privilege of large corporations is now being democratized for entrepreneurs pursuing smart, agile growth.

According to Forbes, the global AI market is projected to reach USD 407 billion by 2027, growing annually at 36.2%. An AMEX census also found that very small companies (1–4 employees) saw AI adoption rise from 4.6% to 5.8% between September 2023 and December 2024.

What AI opportunities are available for SMBs in India?

Running a small business has always been hard, but entrepreneurs are facing new challenges today. AI will be as important as electricity and has evolved from optional upgrades to vital business strategies for companies aiming to thrive in India's highly competitive and fast-growing business ecosystem. Small business owners need to have access to the same powerful tools as large enterprises, designed for them with their needs in mind.

FinTech has brought remarkable new innovations to consumers and the market in recent years, offering new tools and apps that have changed the way most people think about and interact with money. But we’re still evolving, still developing exciting new tech. We need to encourage this continued innovation, and ensuring competition in the marketplace is the best way.

Right now, many small businesses resist AI, clinging to the "why fix it if it isn't broken?" mindset and fearing job displacement. However, for those embracing change, the real opportunity isn't just fixing issues, but future-proofing their operations and unlocking unprecedented advantages. By leveraging AI, they can boost productivity, gain deeper insights for new growth, enhance competitiveness, and proactively mitigate future risks, transforming perceived threats into strategic advantages for a more resilient and prosperous future.

For small businesses, outdated digital infrastructure is a major hurdle. However, upgrading to cloud-based platforms isn't just an IT task; it's an essential leap toward leveraging AI to enhance digital infrastructure and unlock new opportunities. For instance, a financial services company for small businesses in India has leveraged AI to expand financial services to underserved communities, showing how digital upgrades can close long-standing gaps.

Limited financial resources are a significant barrier, as small businesses prioritize tools with clear, immediate returns over complex, oversized solutions. To overcome this, AI adoption must be feasible and show tangible ROI, with tailored tools like AI-powered chatbots, invoice scanning, or predictive sales dashboards directly managing accounts, monitoring dues, reducing staffing costs, and boosting productivity, making investment justifiable and impactful.

AI systems thrive on clean, structured, and up-to-date data, but many small businesses struggle with unorganized or incomplete records. Businesses that maintain organized sales records, expense logs, and customer histories can access precise forecasting and actionable insights. Focusing on effective data management is essential to unlocking AI's full potential and more fintech companies have realised the potential of using tech like Gen AI and Agentic AI to empower their customers.

For instance, agentic AI capabilities automate complex financial tasks. AI agents can handle processes like accounts receivable and payable by processing customer artifacts (e.g., images, documents, emails) and orchestrating necessary follow-up actions. This automation allows business owners to focus more on growth activities.

Similarly, AI agents can automatically gather and populate publicly available information about a customer’s business reducing manual data entry during onboarding. This accelerates the onboarding process, enabling customers to experience product benefits more quickly.

Many small businesses also lack the internal expertise to adopt and operate AI tools, relying instead on traditional workflows. To bridge this gap, upskilling existing staff or hiring digital-native talent is increasingly important. Online learning platforms and government-backed initiatives like Skill India Digital platform offer AI literacy programs designed for entrepreneurs and small business owners. Much like digital banking created new roles in customer advisory and data analysis, AI can unlock emerging roles such as AI tool operators and business analysts, allowing businesses to deploy their workforce more strategically.

The road ahead

Indian small businesses are well-positioned to leverage the AI advantage. The country boasts of one of the largest pools of AI and software talent, making it easier for businesses to access the expertise needed to integrate AI solutions.

Government initiatives such as Digital India, the IndiaAI Mission, MeitY’s Bhashini project (multilingual AI for inclusive access), and Startup India and MSME Digital initiatives that are driving awareness, funding, and support for responsible AI adoption. Further, with growing access to affordable smartphones, digital payments, and cloud platforms like ONDC, India’s digital infrastructure is strengthening, making AI accessible even at the grassroots level.

Local AI companies and platforms provide plug-and-play solutions for inventory management, finance, marketing, and customer support, often in regional languages. These solutions are already making a big impact across diverse businesses.

For example, a clothing seller in Surat relies on a mobile-based LLM tool to generate GST-compliant invoices and track tax obligations in her native Gujarati. These practical applications help small businesses save time, reduce costs, and enhance customer satisfaction, making AI adoption both accessible and impactful for India's small business ecosystem.

This is why fintech is so exciting and important. With a people-centered approach, we can develop technology that serves everyone with real-world improvements. India’s future success does not need to follow the traditional enterprise path to AI. Instead, the country can leapfrog by adopting lightweight, practical AI solutions that empower small businesses – from mom-and-pop shops to local artisans and homepreneurs. This shift can redefine the incredible growth potential for India’s 60+ million small businesses, enabling them to thrive in a digital-first world.

Authored by Prashanth Seshadri, Director, Business Intelligence, Intuit