India’s small businesses could be the biggest AI winners: World Bank report

India’s small businesses could emerge as major beneficiaries of artificial intelligence (AI), with the technology giving even very small firms access to capabilities that were previously available mainly to larger companies, according to the World Bank’s World Development Report 2026: The Promise of Artificial Intelligence.

The report says AI can help small businesses and start-ups organise finances, manage customer service, create marketing materials and reach customers in other countries. This could allow very small firms to perform tasks that previously required the management resources of much larger companies.

Businesses that successfully use AI could potentially expand quickly and create new jobs, the World Bank said. The opportunities could also extend to businesses developing AI products and services themselves, with start-ups in several developing countries already creating AI tools for other firms.

The opportunity is particularly significant for developing economies because most people in low-income and lower-middle-income countries work in very small businesses. The report argues that AI can improve the capabilities of these firms, although the gains will depend on whether the necessary complementary conditions are in place.

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AI adoption story

The World Bank Enterprise Survey on AI Adoption, covering firms in India, Jordan, Kenya, Mexico, Nigeria, Thailand and the United States, found that AI adoption remains uneven. Firms with stronger management capabilities, previous product or process innovation, better market access and stronger labour capabilities are more likely to adopt AI. The India sample included 1,355 firms.

The report also notes that AI adoption among small businesses in developing economies is already significant. One in five small firms surveyed across six developing economies uses AI chatbots, although usage remains largely focused on information searches, writing and translation rather than deeper changes to business operations.

Productivity gains could be significant

The potential productivity benefits are also substantial. Firms surveyed in developing countries expect AI adoption to raise productivity, with estimates ranging from 2% under a less-rapid scenario to 21% under a more-rapid scenario over three years. Few firms expect the number of employees to decline because of AI adoption.

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Adoption alone will not be enough

The World Bank cautions that AI will not automatically deliver these gains. Without the right digital and organisational complements, adoption could widen productivity gaps between smaller and larger businesses. The report therefore recommends that developing economies focus on adopting existing AI tools and adapting them to local circumstances rather than attempting to build frontier AI themselves.

For India’s small-business ecosystem, the report suggests that the biggest AI opportunity may lie not in building the most advanced models, but in giving smaller firms access to technologies that can expand their capabilities and productivity.

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