Small Can Be Beautiful

Context: Digital empowerment is key to making MSMEs future-ready

Ways in which E-commerce marketplaces can drive MSME makeover

• In transformation: at minimal cost, innovation and investment.
  • China captured the world market through the traditional method of having guilds and business centres do transactions by providing a single-window approach.
• Enables MSMEs to compete: successfully in established supply chains by digital empowerment.
• Inclusive development and enhancing livelihoods:
  • Achieving the vision of Atmanirbhar Bharat: as it provides opportunities to artisans and small sellers from Tier-2/3 towns to sell online to customers beyond their local catchment.
  • By investing in supply-chains, the e-commerce sector provides opportunities for MSMEs to partner them in supply and delivery networks – encouraging startups

Way forward

• Enhance ease of doing business online: Sellers on e-commerce marketplaces do not get the advantage of Goods and Services Tax (GST) threshold exemption (of Rs 40 lakh) for intrastate supplies.
• Simplify the PPoB requirement: E-commerce is required to have a physical Principal Place of Business (PPoB). (given the nature of e-commerce, which is not feasible)
  • Replace physical PPoB with Place of Communication will facilitate sellers to get state-level GST with a single national place of business.
• Provide MSMEs with handholding support: to understand how e-commerce functions.
  • Government shall collaborate with e-commerce entities to leverage their expertise and scale to create special onboarding programmes and hold a series of awareness sessions.
  • Examine the existing schemes: to incentivize MSMEs to shift to the digital mode.
• Build physical and digital infrastructure: A robust logistic network and warehouse chains created by e-commerce platforms to enable similar access and reach.
  • The National Logistics Policy should focus on the e-commerce sector needs.
• Dovetail the skilling policy and programmes: with the requirements of the e-commerce sector to meet the future demand of the sector.
• Boost exports via e-commerce
  • Identify products that have the potential for the export market.
  • Connect e-commerce with export-oriented manufacturing clusters, encourage tie-ups with sector-specific export promotion councils, leverage existing SEZs
  • Create a consolidated export policy framework: The Foreign Trade Policy should identify these areas and include e-commerce export specific provisions.