MSME digital advertising generated ₹49,731 crore in economic output in 2025: Google Report

Digital advertising by India's micro, small and medium enterprises (MSMEs) generated an estimated ₹49,731 crore in economy-wide output and ₹32,307 crore in gross value added (GVA) in 2025, according to a report released by Google and the India SME Forum, with technical inputs from Deloitte. The report also estimates that GST collections linked to MSME digital advertising increased to ₹6,534 crore in 2025 from ₹5,000 crore a year earlier. The estimates are based on RBI digital economy multipliers applied to SME and long-tail digital advertising expenditure reported in the FICCI Media & Entertainment Report 2025.

Titled The Google Dividend: Measuring Digital Commerce's Contribution to India's Economic Future, the report projects India's e-commerce market will grow threefold to $250 billion by 2030, driven by rising digital adoption, growing consumption in smaller towns and AI-powered commerce. The findings are based on a survey of 3,249 MSMEs conducted by the India SME Forum in June 2026. Micro enterprises accounted for 72% of respondents, while more than half of the businesses surveyed were located in Tier-II and Tier-III cities.

Digital tools begin delivering business gains

The report says digital adoption is beginning to translate into measurable business outcomes. "Digital adoption is driving measurable growth, with nearly 60% of MSMEs achieving double-digit revenue increases," it said. Among the businesses surveyed, 66% reported expanded market access through digital channels, 58% saw better customer acquisition, while 39% linked digital adoption to stronger return on investment and revenue growth. Another 24% said digital tools improved their international visibility, while 19% reported productivity gains from AI.

Marketing efficiency has also improved for many businesses. Around 78% of respondents reported lower customer acquisition costs, including 43% that saw reductions of up to 25%. More than half said they generated returns of two to three times on advertising spend, with the highest-performing businesses reporting returns of up to five times. Over three-fourths of surveyed MSMEs also said more than 10% of their sales now come from digitally acquired customers.

The report also points to expanding market reach. One in three businesses said they had started receiving international enquiries through digital platforms, while 10% are already accessing overseas markets online. Within India, 27% now serve multiple cities within a state and 21% have expanded across state boundaries. It also cites earlier research showing digitally active MSMEs grow two to two-and-a-half times faster than offline businesses, while digitised enterprises can see direct sales rise by 21-30%.

AI adoption gathers pace, but challenges remain

The report identifies artificial intelligence as the next phase of growth for MSMEs, estimating it could improve profitability by 30-35% through better targeting, automation and business decision-making. However, adoption remains at an early stage. Around 34% of surveyed businesses use AI for content generation, 26% have adopted automation tools and only 15% use predictive AI capabilities.

The survey also highlights the barriers to wider adoption. "Despite growing adoption, significant constraints remain, with 75% of MSMEs facing skill gaps, 60% citing budget limitations, and nearly half struggling with organisational readiness," the report said. Half of the respondents also reported difficulty measuring AI's impact and return on investment.

Digital and export gaps persist

Despite growing adoption, much of India's MSME sector remains under-digitised. Only 13% of MSMEs currently use digital marketing, while 36.8% report difficulties implementing the right digital tools and 35.6% struggle to identify technologies suited to their businesses.

The report also highlights the limited participation of MSMEs in exports despite their contribution to the economy. "While MSME exports increased from ₹3.95 lakh crore to ₹12.39 lakh crore and total exporting firms grew from 52,849 to 173,350 (~228% growth), they still represent only ~0.22% of the total 78.6 million MSMEs, highlighting that over 99.7% of MSMEs remain outside direct export participation," it said.

At the same time, 60% of surveyed MSMEs believe online advertising could boost their export potential over the next three years. The report also notes that 870 million Indians, or 98% of internet users, access the internet in Indic languages, underscoring the growing importance of vernacular digital engagement for businesses looking beyond metropolitan markets.