Four in five MSMEs see digital procurement driving growth: Report

The India SME Forum estimates the MSME procurement economy at ₹124.9 trillion, but says only 30-40 per cent of spending currently takes place through digital channels

About four in five micro, small and medium enterprises (MSMEs) expect digital procurement platforms to play a major role in expanding their businesses over the next three years, according to a report released by the India SME Forum (ISF) on Thursday.

 

The study estimated India’s MSME procurement economy at ₹124.9 trillion, while pointing to significant headroom for digital adoption.

 

The report, based on a survey of more than 27,000 registered MSMEs and official Udyam registration data, found that only 30-40 per cent of procurement spending currently takes place through digital channels, despite more than three-fourths of MSMEs spending between ₹10 lakh and ₹1 crore every month on procurement.

   

Price volatility remained the biggest procurement challenge, cited by 55.7 per cent of respondents, followed by managing multiple suppliers at 37.6 per cent, payment and credit constraints at 35.6 per cent, and the absence of a dependable vendor at 33.4 per cent.

 

Goods and Services Tax-compliant invoicing, flexible credit, a wider product selection, ease of ordering and faster delivery were among the top factors influencing digital procurement choices.

 

Speaking at the launch of the report, Minister of State for Micro, Small and Medium Enterprises Shobha Karandlaje said digital procurement could help small businesses improve efficiency, lower costs, strengthen supply chains and access wider markets.

 

She said procurement should evolve from a routine operational function into a strategic business capability.

 

The report said 61.5 per cent of MSMEs planned to increase their use of digital procurement platforms, while nearly half expected to adopt artificial intelligence-enabled procurement tools over the next two years.

 

Raw materials and machinery were identified as the categories most likely to move online.

 

The report ranked Amazon Business highest on several procurement parameters, including price transparency and supplier quality, while Moglix was identified as a leader in industrial procurement and embedded finance.

 

It noted that platforms such as Meesho, Udaan, Flipkart Business, IndiaMART, IndustryBuying, OfBusiness and Jumbotail also cater to different procurement needs.