Author – Ritesh Ranjan: Tamil Nadu’s micro, small and medium enterprises are set to receive a major technological boost through a new collaboration between the Indian Institute of Technology Madras and the Bureau for Facilitating MSMEs of Tamil Nadu, commonly known as FaMe TN.
The partnership aims to accelerate digital transformation, artificial intelligence adoption and capability building across the state’s MSME ecosystem. By introducing affordable, practical and user-friendly technologies, the initiative seeks to help small businesses improve productivity, strengthen quality control and become more competitive in domestic and global markets.
The programme will be led by the Center of Tech Excellence at IIT Madras, with financial support provided through a corporate social responsibility grant from Walmart Global Tech. It will primarily support MSMEs operating in manufacturing, retail and related sectors where digital tools can significantly improve production processes, decision-making and operational efficiency.
Helping MSMEs Become Digitally Ready
Although digital transformation offers major benefits, many MSMEs struggle to adopt new technologies because of limited budgets, skill gaps and a lack of access to suitable solutions. Some businesses still depend heavily on manual paperwork, basic production methods and reactive maintenance practices.
The IIT Madras and FaMe TN collaboration intends to address these challenges by developing technologies that are affordable, easy to use and suitable for real industrial environments.
A key outcome of the partnership will be the creation of a State-level MSME Digital Readiness and Adoption Index. The proposed index will assess the digital maturity of MSMEs across Tamil Nadu and help identify areas where businesses require additional support.
This assessment is important because MSMEs vary significantly in terms of size, workforce, technical capacity, production systems and readiness to invest in digital infrastructure. A small fabrication unit may require a very different digital solution from a medium-sized automotive components manufacturer.
By evaluating businesses according to their actual capabilities and requirements, the initiative can provide more targeted and effective support.
Cluster-Specific Digital Transformation
Instead of following a one-size-fits-all approach, IIT Madras and FaMe TN plan to develop solutions based on the needs of specific industrial clusters.
Tamil Nadu has a diverse MSME ecosystem covering industries such as automotive components, engineering, textiles, electronics, fabrication, retail and machinery. Each industrial cluster faces its own operational challenges, from quality inconsistencies and machine downtime to inventory management and production delays.
The partnership will conduct digital-readiness assessments, baseline studies and cluster-specific diagnostics to understand these challenges in detail. The findings will then be used to design technology demonstrations, training programmes and implementation strategies.
This field-driven approach will ensure that the solutions are not only technically advanced but also relevant to everyday business operations.
Bringing AI and Industry 4.0 to the Shop Floor
One of the main objectives of the collaboration is to introduce AI-enabled workflows, shop-floor digitisation and Industry 4.0 tools into the daily operations of MSMEs.
According to Prof. Raghunathan Rengaswamy of IIT Madras, the programme will focus on field-deployable technologies capable of improving productivity, quality and global competitiveness in sectors such as automotive, engineering and fabrication.
AI and Industry 4.0 technologies can help businesses collect and analyse production data, identify process inefficiencies and respond to problems before they become costly.
For example, AI-driven anomaly detection systems can identify unusual machine behaviour and alert operators about a possible breakdown. Production analytics dashboards can provide real-time information about output, delays, material usage and equipment performance.
Similarly, smart quality-inspection systems can help manufacturers detect product defects more accurately and consistently. These tools can reduce wastage, improve production yield and minimise the risk of defective products reaching customers.
Addressing Common MSME Challenges
Many MSMEs face operational problems that directly affect profitability and customer satisfaction. These may include unplanned machine downtime, inconsistent product quality, excessive material wastage and a lack of reliable production data.
Manual documentation can also make it difficult for businesses to monitor operations, track orders or evaluate employee and machine performance. Important information may be stored in separate registers or spreadsheets, preventing managers from obtaining a complete view of the organisation.
Affordable digital systems can help businesses overcome these challenges by creating transparent and connected workflows.
Mr. V. S. Venkatesan, General Manager of FaMe TN, highlighted the potential of tools such as AI-based anomaly detection, production analytics dashboards and smart quality inspection systems. According to him, these technologies can improve yield, transparency and digital workflows while addressing low-quality output, manual paperwork and machine downtime.
For small businesses operating with limited resources, even modest improvements in machine utilisation, quality control or inventory management can generate meaningful financial benefits.
Building Digital Skills Through Training
Technology adoption cannot succeed without skilled employees. Recognising this, IIT Madras and FaMe TN will focus not only on providing digital tools but also on developing long-term capabilities among entrepreneurs, supervisors and shop-floor workers.
The partnership plans to organise capacity-building programmes, practical workshops, masterclasses and hands-on digital labs. These activities will allow participants to understand how digital technologies work and how they can be applied within their businesses.
Training workers at different organisational levels will be essential. Business owners need to understand the financial and strategic value of digital transformation, while supervisors and operators must know how to use the technologies during daily operations.
Continuous training will also make digital adoption more sustainable. Instead of depending permanently on external consultants, MSMEs will be able to develop internal teams that can operate, maintain and improve their digital systems.
More than 1,000 participants have reportedly already been trained or engaged through workshops, demonstrations and projects conducted by the Center of Tech Excellence at IIT Madras. This experience provides a strong foundation for expanding the programme across Tamil Nadu.
Moving From Pilot Projects to Large-Scale Adoption
During the next few years, the initiative will focus on field engagements, digital-readiness assessments and pilot deployments using tools developed by the Centre for Excellence in Manufacturing Analytics at IIT Madras.
Pilot projects will allow the partners to test digital solutions within real MSME environments before introducing them on a larger scale. These deployments can reveal practical issues related to cost, usability, employee training and integration with existing machinery.
The programme will also create training materials, implementation guides and case studies based on actual cluster experiences. These resources can help other MSMEs understand the benefits of digital adoption and learn from businesses that have already completed successful pilot projects.
Documenting measurable results will be particularly important. Improvements in production output, energy efficiency, rejection rates, equipment availability and order fulfilment can demonstrate the commercial value of digital transformation.
A Government, Academia and Industry Partnership
The initiative follows a triple-helix model that brings together government, academia and global industry.
FaMe TN will contribute policy support, local industry connections and knowledge of the state’s MSME ecosystem. IIT Madras will provide technical expertise, research capabilities and access to advanced manufacturing and analytics solutions. Walmart Global Tech will support the programme through its CSR contribution.
Combining these strengths could help the initiative move beyond small experimental projects and create a scalable digital-transformation framework.
The partnership may also serve as a model for other states seeking to modernise their MSME sectors. By focusing on affordability, practical implementation and workforce development, the programme addresses some of the biggest barriers preventing small businesses from adopting advanced technologies.
Strengthening the Future of Tamil Nadu’s MSMEs
MSMEs play an important role in employment generation, manufacturing, exports and regional economic development. Helping these enterprises adopt AI, analytics and Industry 4.0 technologies can strengthen the wider industrial economy of Tamil Nadu.
The collaboration between IIT Madras and FaMe TN represents a practical step towards making digital transformation accessible to businesses of different sizes and technical capabilities.
Through readiness assessments, cluster-based solutions, pilot deployments and continuous training, the initiative aims to turn advanced technology into measurable improvements on the shop floor.
Its success will depend on how effectively the partners translate research into affordable and easy-to-use systems. However, with technical expertise from IIT Madras, ecosystem support from FaMe TN and CSR backing from Walmart Global Tech, the programme has the potential to help thousands of MSMEs become more productive, resilient and future-ready.
Frequently Asked Questions
1. What is the purpose of the IIT Madras and FaMe TN partnership?
The partnership aims to accelerate digital transformation, AI adoption and capability building among MSMEs in Tamil Nadu. It will provide practical technologies, training and implementation support to help businesses improve productivity, quality and competitiveness.
2. What is the MSME Digital Readiness and Adoption Index?
It is a proposed State-level index that will assess the digital maturity of MSMEs across Tamil Nadu. The findings will help identify technology gaps and determine the type of support required by different businesses and industrial clusters.
3. Which technologies will be introduced to MSMEs?
The programme will focus on AI-enabled workflows, production analytics dashboards, shop-floor digitisation, anomaly detection, smart quality inspection and other Industry 4.0 solutions.
4. Which industries are expected to benefit?
The collaboration will support MSMEs in manufacturing, retail and related sectors. Automotive, engineering, fabrication and other industrial clusters are expected to be important focus areas.
5. How will the initiative support MSME employees?
Entrepreneurs, supervisors and shop-floor workers will receive support through practical workshops, masterclasses, digital labs, technology demonstrations and continuous capacity-building programmes.