BENGALURU: India’s small businesses are rapidly embracing digital procurement, with four in five expecting online sourcing platforms to drive growth over the next three years, according to one of the country’s largest surveys of micro, small and medium enterprises (MSMEs).
The study ‘Digital Bharat: India Digital Procurement Report 2026’, launched by India SME Forum (ISF) estimates India’s MSME procurement economy at ₹124.9 trillion, highlighting the vast spending digital marketplaces are racing to capture.
The report is based on the India SME Forum’s proprietary MSME Procurement Economy Model (MPEM), which uses official Udyam Registration data and analyses the purchasing behaviour of the country’s 51.53 million Udyam-registered MSMEs.
The findings, released in New Delhi on Wednesday by Shobha Karandlaje, Minister of State for MSME and Minister of State for Labour and Employment showed Amazon Business leading on price transparency (37.3 per cent) and supplier quality (32.6 per cent), while Moglix ranked highest for industrial procurement and embedded finance.
“India’s MSMEs are at the heart of our vision of building a developed and self-reliant economy,” said Karandlaje. “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.”
Mitranjan Bhaduri, director, Amazon Business India, said the report highlights critical evidence of the untapped potential in India’s MSME procurement economy. “The fact that 4 in 5 MSMEs expect digital procurement to drive their growth is a strong signal that the digital shift is transformational,” said Bhaduri. “We remain committed to supporting India’s MSMEs in their procurement transformation journey by continually investing in selection, services and AI-powered automation and insights to transform Procurement from a cost-center to a competitive advantage.”
The report also noted 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.
Price volatility remains the biggest procurement challenge for MSMEs, cited by 55.7 per cent of respondents, followed by managing multiple suppliers (37.6 per cent), payment and credit constraints (35.6 per cent), and the lack of a single dependable vendor (33.4 per cent).
When selecting digital procurement platforms, MSMEs prioritise flexible payment and credit facilities (49.9 per cent), GST-compliant invoicing (45.0 per cent), wider product selection (43.3 per cent), ease of ordering (43.1 per cent) and faster delivery (40.3 per cent). Four in five enterprises (80.4 per cent) expect digital procurement to play a major role in expanding their business over the next three years, while 68.7 per cent plan to buy raw materials online and 61.3 per cent intend to procure machinery and equipment digitally in the future.
Ateesh Kumar Singh, Additional Secretary, The Department for Promotion of Industry and Internal Trade, said 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. However, enforcement gaps, restrictive eligibility conditions, and inconsistent adoption continue to limit their impact.
He called for collaborative reforms to modernise procurement by expanding QCBS to goods procurement, revising procurement thresholds, strengthening mobilisation advances, converging performance security with credit guarantee mechanisms, and introducing sector-specific procurement relaxations.
The study found that more than 75 per cent of surveyed MSMEs spend between ₹10 lakh and ₹1 crore every month on procurement. Despite this scale, only 30–40 per cent of procurement spend currently flows through digital channels, revealing a massive opportunity for digital transformation. Notably, 64.5 per cent 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.
Vinod Kumar, president, India SME Forum, said 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 and policymakers,” said Kumar.
Source: Business Standard
