AI's Impact on Indian Businesses: Unveiling the Advantages and Drawbacks
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The implementation of Artificial Intelligence (AI) in Indian businesses is transforming the landscape of the country's economy, offering both benefits and drawbacks for small enterprises and potential job losses.
Impact on Small Enterprises
While large companies may have the resources to invest in advanced AI tools, small businesses often face challenges due to cost, technical complexity, and lack of expertise. However, the adoption of "minimal viable AI" approaches—using simple, proven AI models tailored to business needs—is becoming increasingly popular among Indian startups and smaller firms, enabling them to address specific problems effectively.
AI can empower small enterprises by automating repetitive tasks, optimizing supply chains, and improving customer engagement, thereby helping them compete better in digitized markets. For example, startups use AI clustering algorithms for logistics optimization or classification models for personalized recommendations, which small enterprises can potentially adopt at a smaller scale.
The rising AI ecosystem and government backing, such as the National Strategy for AI by NITI Aayog, are creating opportunities for startups and small businesses to innovate, particularly in sectors like healthcare, agriculture, and smart cities.
Potential Job Losses and Workforce Effects
According to the 2025 Workforce Skills Report by ServiceNow and Pearson, about 10.35 million Indian jobs will be "redefined" by AI in the next five years. This implies that AI could displace certain roles while transforming others.
More than half (57%) of Indian business leaders report employee fears about job losses due to AI, underscoring the urgency for strategic workforce management. However, AI is seen as a tool to empower, rather than replace, the workforce. Businesses are encouraged to focus on upskilling workers for new roles that AI technologies create, shifting from labor-centric to AI-centric operations.
Additional Considerations
Despite AI’s growth, most Indian enterprises still struggle to realize measurable returns on investment and are in the process of aligning AI strategies with business goals, highlighting implementation challenges. Responsible AI practices are still limited, with only 2% of companies meeting adequate responsible AI standards, raising concerns about privacy, bias, and ethical risks that can indirectly affect employment and societal trust.
Conclusion
AI in Indian business presents both opportunities and risks for small enterprises and jobs. Small businesses can leverage practical AI solutions to enhance competitiveness, but they may need support to overcome adoption barriers. While AI will redefine millions of jobs, proactive upskilling and responsible deployment can reduce negative impacts on employment and maximize economic gains.
Enterprises should be held responsible for decisions made by their AI systems, and AI benefits various sectors in India such as finance, healthcare, and retail. A case study shows how AI can negatively impact a small Indian retail business, emphasizing the need for transparency and accountability in AI systems.
- Small enterprises in India, particularly in the sectors of finance, healthcare, and retail, can utilize artificial intelligence (AI) to automate repetitive tasks, optimize their supply chains, and improve customer engagement, thereby aiding their competitiveness in digital markets.
- To navigate the implementation challenges of AI and ensure measurable returns on investment, businesses, regardless of size, are encouraged to develop AI strategies that align with their business goals. However, they should also prioritize responsible AI practices to mitigate privacy, bias, and ethical risks, which could indirectly affect employment and societal trust.
- As education and self-development play a crucial role in personal growth, businesses should focus on upskilling their workforce for new AI-created roles, helping ensure a workforce that is adaptable to technological advancements in artificial intelligence and other technologies within small-business environments.
