Help MSMEs integrate deeply into global supply chains, says Dr Mukherjee
The Foreign Trade Policy (FTP) should recognize the potential of e-commerce exports and have a separate chapter for e-commerce wherein MSMEs can piggyback on the pre-existing infrastructure that big marketplaces provide for selling internationally to new customer base with minimum investment.
“This can help domestic MSMEs to go global, and integrate them deeply into global supply chains,” said Dr Arpita Mukherjee, Professor, ICRIER, at a virtual session to deliberate on the upcoming FTP which is expected to come into effect from 1 April 2022 for five years to provide a basic policy framework and strategy for promoting exports and trade.
Some recommendations for the specific chapter on e-commerce exports in the Foreign Trade Policy 2022 include:
Increase e-commerce exports awareness;
Implement end-to-end digitization for exports related processes;
Develop specialised logistics capabilities for e-commerce exports;
Simplify compliances and regulatory requirements for e-commerce export;
Create long term capabilities and schemes to support the growth of e-commerce exports.
Empower India organised a virtual session to drive further discussion around the FTP.
The FTP could focus on several short to mid-term measures, which would help iron out the operational inefficiencies that MSMEs face as they export through the e-commerce channel.
At the same time, it should also focus on creating longer term capabilities for e-commerce exports by creating dedicated e-commerce export zones (by leveraging existing SEZs), developing specialised low cost, trackable logistics solutions for e-commerce exports, and extending benefits of schemes like Market Access Initiative (MAI) to e-commerce exporters.
Such exports will lead the potential pathway to a US$400 billion market, taking India a step closer towards the Prime Minister’s vision of becoming ‘Aatmanirbhar’.
Dr. Aruna Sharma, IAS, Former Secretary to the Government, also highlighted, “It is important to have provisions in the FTP 2022 that reduce compliance burdens on small businesses in the country. The new chapter on e-commerce exports should provide working capital and support mechanisms that fund MSMEs in order to increase exports.”
Lloyd Mathias, Business Strategist, and an Angel Investor, added, “E-commerce gives access to the global marketplace, providing MSMEs with a new consumer-set and enabling them to compete with the best in the world. It also enables a self-correcting cycle by providing real-time feedback to help ensure paramount quality and standardisation of products.”
Dr. Avik Sarkar, Professor, Indian School of Business (ISB), stated, “Global e-commerce platforms can play an important role in helping India become a key player in global trade. The government should execute elaborate programs for quality control and certification of products so that MSMEs can be smoothly on-boarded on these platforms.”
With India being home to over 6.3 crore MSMEs that contribute to nearly 40% of India’s overall exports and about 29% towards the country’s GDP through national and international trade, the FTP becomes an important policy instrument.
The existing policies on exports have catered largely to traditional, offline B2B exports.
Given the unique challenges of e-commerce exports, such as cross border transactions, international deliveries and returns, and the critical role it plays in helping local products go global, it is important to create a conducive policy framework for e-commerce exports through FTP that will help lower the entry barrier for MSMEs to start exporting and helping promote e-commerce as a channel of export, Empower India said in a release on 17 Feb 2022. fiinews.com
