Ecommerce will unleash the potential of MSMEs in India: MSME ministry

Ecommerce is a disruptive force for unleashing the potential of MSMEs in India. We, at the government, realise the relevance and importance of ecommerce, Rajneesh, Additional Secretary and Development Commissioner, Ministry of Micro, Small, and Medium Enterprises (MSME), said during a workshop on “Growth of Retail and Ecommerce in India” on April 30, 2023.

Organised by the Federation of Indian Micro, Small, and Medium Enterprises (FISME), the workshop aimed to identify the policy obstacles faced by small businesses and retailers in joining digital retail and ecommerce.

It was attended by more than 40 delegates representing MSMEs, think tanks, payment service providers, ecommerce, last-mile delivery platforms, and industry organisations, such as Amazon, Meesho, Zomato, BlinkIt, PayU, and Shiprocket, among others. 

The workshop provided constructive recommendations to the government on how offline and online channels can complement each other to embark on a new era for retail 4.0.

"India is an aspirational country—we are on our way to becoming a $5 trillion economy and will soon be a $10 trillion economy. This won't be possible by only relying on traditional ways of business,” said Rajneesh. 

“There is an urgent need to educate MSMEs on the benefits of online selling, such as access to a wider audience and nuanced market intelligence,” said Anil Bhardwaj, Secretary General, FISME. He added that a level-playing field should be established between online and offline businesses and the additional compliance burden imposed be limited for online sellers.

The workshop also discussed the reforms required to integrate offline and online retail channels. 

Key recommendations:

1. GST parity: Online businesses must register under GST regardless of turnover. However, for offline sellers, it only applies to companies with a turnover of over Rs 40 lakh. This creates an unequal playing field between offline and online retail and should be changed.
2. MSME empowerment: To empower MSMEs, provisions like exemption from import duties on returns, inventory and order management support for new businesses, simpler funding options and subsidies, and efforts to drive awareness around digital marketing, should be incorporated into policies.
3. Enabling ecommerce policy: Simpler and more enabling government policies for online businesses, removing disparity between the regulatory requirements for online and offline sellers, and exemption of additional compliance obligations for online sellers.
4. Driving awareness: MSMEs are unaware of the benefits of ecommerce platforms and the regulatory requirements for selling online. A favourable policy, particularly for women entrepreneurs, to increase their participation, a uniform ecommerce logistics policy made simpler for new MSMEs to reduce transactional costs, simpler onboarding process, and other ways to help small sellers. Additionally, an information portal to serve as a one-stop destination for regulatory policies will help educate MSMEs.