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INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue IV, April 2026
“IOT Adoption in Manufacturing MSMEs of India: A Review of
Barriers, Opportunities and Policy Landscape”
Supriya Prasad Daware
1
, Dr. Nitin Sopan Bhand
2
1
Research Scholar, Amrutvahini Institute of Management and Business Administration, Sangamner.
2
Associate Professor, Amrutvahini Institute of Management and Business Administration, Sangamner
DOI:
https://doi.org/10.51583/IJLTEMAS.2026.150400093
Received: 20 April 2026; Accepted: 25 April 2026; Published: 16 May 2026
ABSTRACT
The adoption of Industrial Internet of Things (IIoT) technologies among manufacturing Micro, Small and
Medium Enterprises (MSMEs) in India remains remarkably low despite a decade of government promotion.
This paper reviews academic studies, government reports, and news articles published between 2018 and 2025
to understand the barriers to IIoT adoption in this sector. The review identifies four interconnected categories of
barriers: technological (outdated machinery, poor connectivity), organizational (digital skill shortages, low
awareness of government schemes), financial (credit gap of ₹80 lakh crore, high upfront costs), and
environmental (underdeveloped vendor ecosystems, policy implementation gaps). Despite these barriers,
documented success stories demonstrate that IIoT adoption is both feasible and beneficial. One study achieved
22.5% reduction in cycle time and 71.43% reduction in errors with an investment of INR 1.3 lakh. Industry
reports document 20-25% improvements in efficiency and 35% reduction in defects among early adopters. The
paper concludes that while the technology works and the costs are affordable for many medium enterprises,
adoption remains low due to interacting barriers that no single policy or intervention can address alone.
Keywords: Industrial Internet of Things, IIoT, MSME, manufacturing, India, technology adoption, barriers
INTRODUCTION
Background
The Indian government has been talking about Industry 4.0 for nearly a decade. "Make in India," "Digital India,"
"Smart Cities Mission" the list goes on. But here is the uncomfortable truth. A recent NITI Aayog-backed report
found that 82% of medium enterprises in India do not use advanced technologies like AI or IoT in their
operations. Worse, 60% still rely on outdated machinery that hurts their productivity and product quality
(Administrative Staff College of India, 2025). Think about what this means. Millions of workers. Billions in
potential output. India's dream of becoming a global manufacturing hub. All stuck because old machines cannot
talk to new software. The Indian IoT in manufacturing market was worth INR 422.57 billion in FY 2022 and is
expected to reach INR 774.90 billion by FY 2027, growing at over 13% annually (India Smart Manufacturing
Report, 2024). The opportunity is enormous. So why are MSMEs not grabbing it?
Scope of Study
This paper reviews existing literature to understand why manufacturing MSMEs in India struggle to adopt
Industrial Internet of Things (IIoT) technologies. The MSME sector contributes about 29% to India's GDP,
accounts for roughly 40% of exports, and employs over 60% of the workforce (NITI Aayog, 2025). But here is
a number that surprised me: 97% of registered MSMEs are micro enterprises, 2.7% are small, and only 0.3% are
medium enterprises. Yet that tiny 0.3% contributes nearly 40% of all MSME exports (Administrative Staff
College of India, 2025). These medium enterprises are the unsung heroes of Indian manufacturing. Research
shows that IIoT can enable real-time production monitoring, predictive maintenance, quality control, and supply