Tuesday 20 July 2021

E-Commerce Role in MSME Growth


Introduction

The Micro Small and Medium Enterprises (MSMEs) sector is a key contributor to the socio economic development of the country. India comprises 6.3 crore MSMEs and the number of registered MSMEs increased 18.5% Y-o-Y to reach 25.13 lakh (2.5 million) units in 2020 from 21.21 lakh (2.1 million) units in 2019. The MSMEs sector contributes 29% towards the Indian GDP through its domestic and international trade. The Indian government envisions to double the country’s economy to US$ 5 trillion in five years and to achieve this goal, it aims to enhance MSME’s share in exports and its contribution to the GDP. In addition, in FY22, the government increased (by 2x) MSMEs budget to Rs. 15,700 crore (US$ 2.14 billion) vis-à-vis Rs. 7,572 crore (US$ 1.03 billion) in FY21.

Key initiatives by e-commerce companies to boost MSMEs sales

  • 'SAMARTH’ by Flipkart: - Flipkart, a local platform, developed/introduced Samarth programme to promote Indian artisans, weavers and state handloom industries in July 2019. Through this initiative, the company aims to provide MSMEs an easy access to the online business marketplace and support in terms of business management, storage and account management. Flipkart intends to empower millions of small businessmen, leading to rural India's development with Samarth.

  • ‘MSME Accelerate’ by Amazon: The Company launched this initiative to help MSMEs recover from the aftermath of the pandemic in June 2020. Through this programme, businesses can avail offers and bulk discounts to continue/run their businesses smoothly.

  • Collateral-free loans by Paytm: Paytm launched an initiative to offer unsecured loans of up to Rs.5 lakh (US$ 6,729), at low interest rates, to MSMEs. Under this initiative, Paytm, in partnership with banks and NBFCs, digitised the entire loan process, from application to disbursement, without additional document requirements.

  • ‘Atmanirbhar Section’ by Shopclues:  Shopclues launched an online ‘Vocal for Local’ market platform, which includes locally produced products in various categories such as fashion, footwear, jewellery, groceries and others as part of this initiative,. The company works with thousands of local merchants and promotes local products on the marketplace.

Key Recent Developments Supporting MSMEs

  • April 2021: Amazon announced the 'Spotlight North East’ programme (US$ 25 million) to bring together and provide online support to 50,000 artisans, weavers and small businesses from all eight states in the Northeast by 2025; and boost exports of key commodities such as tea, spices and honey.

  • April 2021: ICICI Bank launched ‘Merchant Stack’, a comprehensive digital banking services that is specially curated for retail merchants. These value-added services enable users—such as merchants, grocers, supermarkets, large retail store chains, online businesses and large e-commerce firms—to meet their banking requirements and further serve their customers amid the pandemic. In addition, users can avail these contactless services on InstaBIZ, the bank’s mobile banking application.

  • April 2021: Vedanta Limited, a leading producer of metals and oil & gas, launched the ‘Vedanta Saathi’ programme, which offers services including channel financing in partnership with a host of banks, NBFCs and fintech firms; soon to be launched e-commerce solutions (such as transparent pricing and live pricing options, direct buy access to a diverse product portfolio with no bar on quantity and easy delivery tracking & micro-logistics); avenues for technical upskilling; opportunities for MSMEs to set up downstream/ancillary manufacturing units near Vedanta’s plants; and a dedicated web portal for MSMEs to interact with Vedanta’s quality, product application, engineering and innovation teams.

  • February 2021: Walmart's Vriddhi programme was extended to Uttar Pradesh, with launch of an e-institute to facilitate small businesses in granting access to skills and competencies across online and offline platforms such as Flipkart's marketplace and Walmart's global supply chain, resp. This new e-institute will benefit 50,000 MSMEs across the country to expand domestically and globally.

  • February 2021: Mastercard and Razorpay joined forces to help small Indian businesses and entrepreneurs embrace digital payments. This partnership will integrate Razorpay's payment processing capabilities with Mastercard's digital banking platforms and card services.

  • February 2021: Bank of Maharashtra collaborated with Vayana Network, a supply chain financing (SCF) platform, to provide financial assistance to MSMEs. Through this partnership, the bank will provide short-term credit to address the budget needs of legitimate corporate dealers/vendors through its Mahabank Channel Financing and Vayana Network scheme.

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