The survey’s findings — which were released on October 9 in the report Annual Survey of Micro, Small, and Medium Enterprises (MSMEs) in India: Leveraging e-Commerce for the Growth of MSMEs — showed low awareness among MSMEs with regard to the benefits of integrating their operations with e-commerce platforms. Policymakers have to roll-out a multi-pronged strategy to change the status quo, it said.
Mentioning some of the key benefits of leveraging e-commerce platforms for MSMEs, Radikha Kapoor, Professor at ICRIER, said, “E-commerce platforms have been found to enable them (MSMEs) to access wider markets, boosting their sales and revenue. They are also able to do this at a lower cost than they would have had to pay if they had no access to such a platform. MSMEs on e-commerce platforms are also able to get quality feedback about their products, which enables them to improve the products. They are also able to make use of better training, skill development and mentorship programmes. Of course, the survey also has evidence that integrating with e-commerce platforms facilitates access to finance for small businesses.”
The survey found that the size of a firm was a factor in e-commerce integration. As many as 615 of the 1,310 micro firms that were surveyed; 259 of the 383 small firms and 131 of the 3,414 medium companies that participated in the survey were using e-commerce to grow business. Also, women-owned MSMEs were not far behind male-owned ones in integrating with e-commerce platforms; 50% of women-run companies were integrated with e-commerce platforms, said the survey.
It also found that MSMEs that export have higher e-commerce platform integration than non-exporting firms, indicating a positive correlation between export orientation and e-commerce adoption. According to the survey, 1,005 enterprises were already connected to e-commerce platforms, while the remaining 1,002 were not.
“A vast majority of the surveyed enterprises reported that the inability to access markets, retain customers, and effectively market their products were among the top challenges faced by them. Given that market access and marketing-related challenges are a significant constraint to their growth, MSMEs recognise the potential of e-commerce to expand their reach to a wider market,” it stated. The survey included the cities of Ahmedabad, Bhubaneshwar, Delhi, Jaipur, Lucknow, Ludhiana, Jalandhar, Agra, Meerut, Saharanpur, and Chennai. MSMEs were chosen from six product categories: sports goods (16.7%), toys (15.7%), processed and preserved food products (16.9%), apparel (17%), furniture (17.6%), and handicraft products (16.1%).In the light of these findings, internet pioneer Sanjeev Bikhchandani said MSMEs must use digital tech and e-commerce to scale up and remain competitive globally and domestically. “Right now, it is widely believed that e-commerce has the potential to enhance market access for MSMEs worldwide. But it cuts both ways actually and enables overseas MSMEs to get market access into India. So it helps you compete in the global market, but it also could make your local market more competitive.”
Bikhchandani, the founder and Executive Vice-Chairman at Info Edge, the company that owns Naukri.com, said the current government’s emphasis is on digitalisation. This is evident from the growth in digital business transactions, the penetration of mobile phones and people buying online.
The e-commerce route offers huge opportunities for the country’s MSMEs and they must tap it, he said. “If you look at the G20 community, the integration of MSMEs and startups in global supply chains is becoming increasingly important as it emerges as a global priority,” Bikhchandani said, adding that this presents a significant opportunity for Indian MSMEs. Besides, the opportunities emerging due to China-Plus-One also require MSMEs to rapidly adopt digital technologies, especially in the e-commerce space.
