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In recent times, digital transformation (DT) has witnessed a surge in popularity, not only within large enterprises (LEs) but also among small and medium-sized enterprises (SMEs). Various sectors, including manufacturing, have shown a keen interest in embracing DT for their operational and supply chain needs. Beyond delivering benefits such as improved product quality, revenue growth, enhanced customer service and heightened safety measures, DT offers a range of advantages, including heightened productivity, risk mitigation and environmental protection. However, in developing countries like India, manufacturing SMEs encounter significant challenges when attempting to embrace DT. Therefore, this study aims to identify and model the obstacles that impede DT adoption within the context of Indian manufacturing SMEs.

The literature review was used to pinpoint the barriers to adopting DT. Subsequently, these identified barriers underwent validation within the specific context of Indian manufacturing SMEs through the assessment of an expert team. The expert team proceeded to model these barriers using the interpretive structural modeling approach.

This study shows that high investment, return on investment and multiskilled workforces are the most crucial barriers to DT adoption. The proposed study aids policy and decision-makers in identifying the connections and dependencies between the barriers.

It provides a guideline for practitioners to deal with DT adoption barriers in the Indian manufacturing SMEs.