Given the rapid increase in e-commerce sales and emergence of small businesses in the last decade, the government had proposed to create a national e-commerce policy last year. This is said to be in the final stages and is expected to be released this year.
Vinod Kumar, President, India SME Forum, says to enhance MSME exports, the budget should prioritise on bringing a one-stop information portal for exporters; promote ease of merchandise export by exempting first-time exporters from fines for non-compliance; and implement an accurate tracking mechanism for exports.
“Implementing a reliable mechanism, such as utilising GSTN registrations or providing incentives for MSMEs to register on Udyam, is crucial. This will ensure accurate measurement of MSME data, aiding policymakers in identifying growth drivers, evaluating policy impacts and negotiating trade agreements effectively. Increasing the payment variation clause from 25% to 50%, introducing annual financial reconciliation processes, and exempting import duties on rejects/returns are vital steps,” said Kumar, also trustee and president of FIRST (Forum for Internet Retailers, Sellers, and Traders).The budget should focus on distinguishing between exporter on record (EOR) and seller on record (SOR), which will help free up time for sellers to focus on product offerings.Kumar also pointed out the need for introducing advanced data analytics to detect multiple registrations and holding relevant departments accountable for timely incentive disbursement enhances transparency. He further suggested allowing free-of-charge import of samples with appropriate safeguards can stimulate innovation and trade.Tanmay Kumar, Chief Financial Officer at Shiprocket, said the budget’s focus areas should be around offering tax breaks on export earnings, R&D related to exports, and enhancing MSME’s focus on international markets.While the government has been taking a few steps to support exports by MSME, there is a need to realise that export growth also requires rapid advances in the ecosystem. “There are multiple learnings on this from China. The government needs to provide incentives for investment in technology and MSME-focussed warehousing in India as well as abroad by providers like Shiprocket. The problem of obtaining market access is not only directly solved by government-organised forums; these need to be supplemented massively by the private sector doing the same. This is where the government should start incentivising and facilitating,” he said.
Here, India SME Forum’s Kumar said that automation of processes like document verification and pre-arrival approvals, along with simplified return procedures for e-commerce products, would enhance operational efficiency. “Upgrade airport and port facilities to expedite cargo handling and processing, with a specific focus on encouraging investments in specialised cold chain facilities for perishable exports. Implementing dedicated express export lanes at airports and ports is crucial for swift clearance of shipments,” he said.
To incentivise progress in the industry, he suggested offering tax breaks or subsidies for investments in modern logistics infrastructure and ensuring that technologies relevant to express exports becomes imperative.
Nirupama Soundararajan, Partner, Policy Consensus Centre, pointed out that there are two key parameters that require policy intervention for realising the potential of direct e-commerce exports.
“First, MSMEs must have access to information and helping hand at one point, the district hub even, on not just identifying products, but also on logistics connectivity, credit, and most importantly on regulatory compliances on forex reconciliations. Dealing with the RBI compliances for reconciliation of remittances in an existing challenge (largely due to netting off that happens by the e-commerce platform such as Amazon and Alibaba and transfers made to the MSME). This process has to be simplified for MSMEs,” she said.
India must focus on lowering logistics costs to make e-commerce exports more competitive. India Post must be utilised better, given its excellent last-mile connectivity. “Every post office in every district, must be equipped to process exports, instead of it having to be routed through the head office. E-commerce exports rely on fast delivery. Hence, customs clearances must happen in a timely manner. Furthermore, customs process and costs cannot be prohibitive, particularly for low-value exports,” she added.
