SME Forum’s Largest-Ever Survey on MSME Digital Procurement, Four in five MSMEs see digital platforms as critical in expanding their business

 

New Delhi: India SME Forum (ISF) today launched the ‘Digital Bharat: India Digital Procurement Report 2026’, one of India’s most comprehensive studies on MSME procurement behaviour and digital adoption. Covering India’s 515.3 lakh Udyam-registered MSMEs, the report was unveiled by Sushree Shobha Karandlaje, Hon’ble Minister of State for MSME and Minister of State for Labour & Employment, during an event in New Delhi attended by MSME industry leaders, entrepreneurs, and other dignitaries including Shri Ateesh Kumar Singh, Additional Secretary, DPIIT and Shri Keshvendra Kumar (IAS), Joint Secretary, Ministry of MSME.

The ISF report, developed using the proprietary MSME Procurement Economy Model (MPEM) built on official Udyam Registration data, provides the first comprehensive estimate of India’s MSME procurement economy and maps the evolving digital adoption landscape across the sector. Based on one of India’s largest MSME procurement surveys, covering enterprises across manufacturing, services and trading sectors, the report estimates that India’s MSME procurement economy is valued at INR 124.9 trillion, making it one of the country’s largest business expenditure categories.

 

Among the services evaluated, the survey found that Amazon Business emerged as the leader for price transparency, with 37.3% of respondents identifying it as their preferred choice. It also ranked first for supplier quality, with 32.6% of respondents selecting it as the service offering the best supplier network. Moglix emerged as a leader in industrial procurement and embedded finance, reflecting growing demand for specialised procurement solutions among manufacturing MSMEs.

Commenting on the report, Sushree Shobha Karandlaje, Hon’ble Minister of State for MSME and Minister of State for Labour & Employment, said: “India’s MSMEs are at the heart of our vision of building a developed and self-reliant economy. As businesses increasingly adopt digital technologies, procurement too must evolve from a routine operational function into a strategic business capability. Digital procurement can help MSMEs improve efficiency, reduce costs, access wider markets and build stronger supply chains, enabling them to compete more effectively in India and globally. My thanks to India SME Forum for crafting the report and curating this event. Congratulations to Amazon Business as they emerge as the preferred partner for MSMEs. I urge them to continue this with even more vigour.”

 

Speaking on the findings, Mitranjan Bhaduri, Director, Amazon Business India, said: “This report by India SME Forum provides critical evidence of the untapped potential in India’s MSME procurement economy. At Amazon Business, we see our role as an enabler, helping MSMEs access trusted suppliers, transparent pricing and seamless purchasing experiences. The fact that 4 in 5 MSMEs expect digital procurement to drive their growth is a strong signal that the digital shift is transformational. We remain committed to supporting India’s MSMEs in their procurement transformation journey by continually investing in selection, services and AI-powered automation & insights to transform Procurement from a cost-center to a competitive advantage.”

 

Speaking at the launch of the report, Shri Ateesh Kumar Singh, Additional Secretary, DPIIT, said “India has already established a strong policy framework to support MSMEs in public procurement, the next phase must focus on effective implementation and continuous reform. Existing provisions including procurement mandates for MSMEs, quality- and cost-based selection (QCBS), procurement relaxations, Make in India preferences, and startup-friendly procurement norms have created a solid foundation, but enforcement gaps, restrictive eligibility conditions, and inconsistent adoption continue to limit their impact. There is a need for collaborative reforms to modernize procurement by expanding QCBS to goods procurement, revising procurement thresholds, strengthening mobilization advances, converging performance security with credit guarantee mechanisms, and introducing sector-specific procurement relaxations. Policymaking must remain consultative, with active participation from industry stakeholders to shape practical reforms and build a more transparent, inclusive, and growth-oriented public procurement ecosystem.”

 

The study found that over 75% of surveyed MSMEs spend between ₹10 lakh and ₹1 crore every month on procurement. Despite this scale, only 30–40% of procurement spend currently flows through digital channels, revealing a massive opportunity for digital transformation. Notably, 64.5% of procurement decisions are still taken directly by business owners, indicating that digital tools must be designed for ease of use and accessibility rather than complex enterprise workflows.

 

Reflecting on the significance of the study, Shri Keshvendra Kumar (IAS), Joint Secretary, Ministry of MSME, said “I congratulate the India SME Forum for bringing out the India MSME Digital Procurement Report, which provides valuable insights into one of the most important yet underexplored aspects of MSME competitiveness. Strengthening procurement is essential for improving productivity, reducing costs, and enabling sustainable growth for small businesses. Government procurement from MSMEs has witnessed remarkable progress, reflecting the positive impact of sustained policy efforts. The next step is to build a collaborative procurement ecosystem where government, digital platforms, and industry work together to enable MSMEs to source efficiently from one another through trusted digital channels. The findings of this report can make a meaningful contribution to future policy decisions and the continued growth of India’s MSME sector.”

 

Key Findings: Scale of India’s MSME Procurement Economy

• Price volatility (55.7%) remains the biggest procurement challenge, followed by managing multiple suppliers (37.6%), payment and credit constraints (35.6%) and the absence of a single dependable vendor (33.4%).
• GST-compliant invoicing (45.0%), wider product selection (43.3%), ease of ordering (43.1%) and faster delivery (40.3%) are the top decision factors for MSMEs choosing digital procurement solutions; nearly half (49.9%) also prioritise flexible payment and credit facilities.
• Four in five enterprises (80.4%) anticipate that digital procurement will play a major role in expanding their business over the next three years.
• Raw materials (68.7%) and machinery & equipment (61.3%) are the top product categories MSMEs want to procure online in the future, signalling willingness to source core production inputs digitally.

Vinod Kumar, President, India SME Forum, said: “For too long, procurement has been treated as a routine operational expense rather than a strategic lever for MSME competitiveness. Our research reveals that India’s MSME procurement economy, at INR 124.9 trillion, represents one of the largest economic opportunities for digital transformation in the country. While digital adoption has accelerated, with over two-fifths of MSMEs already using digital procurement for more than two years, the next frontier lies in helping enterprises transition from occasional online purchasing to fully integrated, data-driven procurement. This will require a collaborative effort between industry, enablers like Amazon Business and policymakers to build stronger supplier networks, improve access to procurement-linked finance and develop digital capabilities at scale.”

The report also maps India’s evolving digital procurement landscape, identifying five distinct procurement models serving different business needs. Global evidence shows that digital maturity drives procurement adoption, with enterprise solutions excelling at integration, leading B2B portals prioritising user experience and trust and industrial specialists adding value through domain expertise. In the Indian context, the survey benchmarked based on overall preference, ease of use, customer support and user feedback.

 

For overall buyer experience, including ease of use and customer support, Amazon Business and Moglix jointly received the highest satisfaction rating of 9.5 out of 10 from surveyed MSMEs. The report notes that India’s digital procurement landscape is diverse, with services such as Meesho, OfBusiness, Udaan, Flipkart Business, IndustryBuying, IndiaMART and Jumbotail playing important roles in serving different procurement needs across the MSME spectrum.

The report further highlights that India’s Digital Public Infrastructure stack, including Aadhaar, UPI and GST, provides a globally unique foundation for building an inclusive digital procurement environment. Around 59.5% of MSMEs say GST-compliant invoicing strongly influences their choice of procurement service, underscoring how India’s DPI layer is directly enabling procurement digitisation. As procurement becomes increasingly data-driven, integrated digital solutions can help MSMEs simplify sourcing, strengthen compliance, optimise costs and build more resilient supply chains.

The report concludes that India’s digital procurement landscape is entering a new phase of maturity. With 61.5% of MSMEs planning to increase their use of digital procurement tools and 49.7% expecting to adopt AI-powered procurement solutions over the next two years, the sector is poised for rapid transformation. The study recommends building an open, trusted, data-driven and inclusive procurement environment that empowers MSMEs, reduces costs, drives competitiveness and positions India as a global leader in digital procurement. Accelerating this transition can significantly improve MSME productivity, ease of doing business and support India’s ambition of becoming a global manufacturing and innovation hub.