Small businesses investing in AI doubled in 2024: Survey
Indian small businesses adopting artificial intelligence (AI) are growing, with the number of firms investing in AI more than doubling in 2024, according to CPA Australia’s latest Asia-Pacific Small Business Survey. India saw a sharp rise in small businesses allocating resources to AI, doubling from 13 per cent in 2023 to 26 per cent in 2024. The count grew from 11 per cent in 2022, seven per cent in 2021 and six per cent in 2020.
According to the survey, technology investments also improved profitability for 66 per cent of Indian respondents in 2024, higher than the Asia-Pacific average of 56 per cent.
The survey, which recorded responses from 4,236 small businesses in Asia Pacific, including 507 from India, was conducted in November and December last year. The markets surveyed were Mainland China, Hong Kong, Taiwan, Malaysia, Vietnam, India, Indonesia, Philippines, Singapore, Australia and New Zealand.
The surge in AI-related investment puts India ahead of its regional peers among small businesses, underscoring the need to leverage deep technology for business growth.
The increase in AI investment reflects the rising business confidence among Indian small enterprises. According to the survey, 86 per cent of Indian respondents expect business growth in 2025 — the most optimistic outlook since 87 per cent in 2021 and higher than the Asia-Pacific average of 71 per cent.
“The positive outlook among MSMEs can be attributed to a combination of domestic and international factors. Domestically, technological advancements, improved infrastructure like the enhanced internet connectivity, and supportive government policies for MSMEs in finance and digitalisation have fostered a beneficial environment for small businesses to thrive,” said Prafulla Chhajed, a CPA member of CPA Australia and former President at the Institute of Chartered Accountants of India.
Employment generation is another critical area in which India’s small businesses are making strides. The report revealed that Indian small businesses recorded 46 per cent employee growth in 2024 — the highest in the region while small businesses in Vietnam and Indonesia saw 44 per cent and 43 per cent employee growth respectively.
The projected employee growth in 2025 is highest at 64 per cent among Indian small businesses in comparison to the Asia-Pacific average of 45 per cent.
“Small businesses not only create jobs but also nurture the next generation of entrepreneurs. In a tech-driven era, India’s abundant young population will continue to drive economic momentum. As digital natives, they are well positioned to innovate and harness emerging technologies,” said Chhajed.
Although there is optimism, challenges remain. Increasing costs and competition along with rising rentals were the key challenges in 2024. To fuel growth and cater to these challenges, Indian small businesses expect strong demand for external finance to continue. For 68 per cent, it would primarily be to fund business growth, purchase capital assets for 34 per cent, business survival for 32 per cent, covering increasing expenses for 31 per cent, and more.