Why Indian SMEs trust homegrown solutions over foreign offerings

A large part of India’s economy runs with its SMEs. The chai stalls that scaled into a successful catering service, or a Surat-based apparel brand that began from a single room, even tech startups of Bengaluru that expanded from late nights and borrowed laptops. Recent reports suggest that the country holds over 63 million SMEs and MSMEs that are highly connected with their surrounding communities. While many of them face funding crunches, aspects like trust, adaptability, and creativity help them become successful. As these businesses scale and look for technology support, the vast majority of them instinctively prioritise homegrown solutions over overseas giants, as local innovation often understands the business requirements in India in a more intricate way compared to global solutions.

The gap between foreign promises and Indian realities

The distinguishing factor for foreign software is the sophistication and global credibility. However, their promises often fail to match the intricacies of Indian business requirements that are often distinctive in comparison to their global peers. For instance, a global SaaS platform offering hassle-free tax compliance faces challenges when GST compliances come into play, especially when they vary across states. This is where an imported ERP system that is powerful fails to comprehend how Indian retailers double their overall sales during Diwali, or how local shops operate with both UPI payments and manual ledgers.

Indian businesses often operate in a very customised way that is specifically meant for their domains, but they can become successful in controlled chaos. Their operations leave room to pivot during festivities, depend on innovations that are highly customised considering the local business nature, and use diverse languages on the same day. For instance, they may be serving a supplier in Hindi in the morning, while speaking with a distributor in Tamil in the latter half of the day. Foreign-built software, irrespective of its high level of refinement, requires a “translation layer” before it can adapt to these specific requirements.

At the same time, homegrown platforms build their products while considering the local business requirements and challenges. They have already considered why a SME proprietor requires WhatsApp integration or why a multilingual interface becomes essential for them to operate. The foundational essence of homegrown platforms integrates these essential parts into their software as a necessity.

Grassroots use cases

For long, Indian kirana stores have struggled with registers, receipts, and often an unpredictable flow of stock. To streamline operations, an imported POS system demands structured inputs that are often not available, and a customer service that is unavailable during Indian business hours. This is where an Indian POS tool helps the proprietor to input “just enough” data, recognises the irregular inventory patterns automatically, and during challenges, the customer service can speak in a language the proprietor is able to understand. This highlights how the difference between the Indian-built and foreign-built tools is in market fit but not in features.

The true extent of this integration is extensively larger than popularly thought. For instance, local manufacturing units that regularly manage suppliers, shipments, and changing raw material costs often become overwhelmed. At the same time, foreign-built ERP platforms become significantly rigid for them, in contrast to an Indian peer. Indian AI-powered tools for similar operationality are customised for these realities, like supply chain dynamics, flagging delays before they take place, recommending alternative options that are cheaper, and explaining all data in a simple dashboard that the operators can understand.

A similar instance can also be found in EdTech, where CXOs are beginning to understand the importance of the availability of customer support during their business hours instead of a ticket routed across continents. The proximity and shared urgency lead to trust and long-standing credibility.

Beyond features, trust is a relationship.p

Indian SMEs are known for their trust, and many of them think that credibility is generated not on flashy interfaces or branding, but via shared struggles, cultural familiarity, and the confidence that their tech partners grasp their requirements well. For instance, Indian farmers have significantly more trust in an Indian app for pricing produce since the developers have an innate experience of seeing mandi transactions. Similarly, a trader trusts an Indian accounting platform since it provides more expertise in GST filings. This highlights that trust is no longer an afterthought but the pinnacle of adoption, and homegrown solutions are in the pole position to garner it naturally.

A recent survey showcases that in India, over 39% women entrepreneurs prefer domestic tech solutions for greater localisation aspects like language support. Further research reports reveal that in the ERP segment, up to 60% Indian small businesses prefer localised solutions for their business requirements, primarily owing to the cost-effective model as compared to global peers.

A call to strategic patriotism

Indian SMEs trust homegrown solutions as a strategic patriotism. Every transaction that benefits local innovation helps to grow the seed of India’s industrial acumen. These investments, as a result, create sustainable platforms with adaptive technologies, but more importantly, lead to an ecosystem that creates a more sovereign economy. Furthermore, Indian SMEs are not passive technology consumers, and they ensure that technology is developed by prioritising their requirements. As Indian SMEs scale, their choice of tech partners ensures they remain competitive, while also contributing towards a more robust and sovereign India of tomorrow. As India looks forward to creating technological sovereignty in the future, the push must come from the grassroots with 63 million SMEs, prioritising homegrown solutions for their technology support, celebrating local innovation to take business requirements ahead of global peers.

Authored by Vipul Prakash, Founder & CEO of FireAI