E-commerce Key to Boosting MSME Exports: Experts

 E-commerce exports offer tremendous growth potential for Indian MSMEs, but currently see only 1% engaging in direct exports. To achieve the government's ambitious target of $200-300 billion in e-commerce exports by FY 2030, it is essential to adopt more flexible policies and address existing challenges in customs, payments, and logistics. India SME Forum, the largest not-for-profit organization for MSMEs in India, hosted a ‘FireSide Chat’ titled "Plugging MSMEs in Global Markets: Harnessing the potential of B2C Exports” which explored the role played by e-commerce in enhancing the export potential of MSMEs and the imperatives for conducive regulatory policies.

E-commerce provides a unique opportunity for MSMEs, requiring minimal initial investment and enabling participation from diverse sellers across India. As awareness and interest grow, driven by ease of entry and global reach potential, businesses are increasingly embracing this avenue. To further accelerate growth, simplifying regulations is crucial. Experts commend the Central Government for promoting MSME e-commerce exports through new policies, including establishing e-commerce export hubs. These hubs, offering services like warehousing, packaging, and shipping, reduce operational costs and provide essential regulatory and compliance assistance, easing international trade navigation. However, despite these initiatives, challenges remain, particularly due to financial and regulatory barriers. High EDPMS closure charges can consume up to 50% of shipment value, making exports unviable for small parcels. The RBI's 25% variation limit on payment reconciliation is often insufficient for transactions with high price variability. Increasing this limit to 50% and extending payment realization periods to 18 months would better support MSMEs and align with best global practices.

Additionally, customs reforms are essential to facilitate e-commerce exports. The primary policy proposal is to simplify and expedite the customs clearance process for certain low-risk shipments through pre-emptive assessments and automated procedures. This includes establishing separate customs supervision codes specifically for cross-border e-commerce trade to ensure faster clearance, streamline payment procedures, and enhance data collection for policy making. 

Mr. Bipin Sapra, Partner, EY - “Indian MSMEs have tremendous potential to excel in global e-commerce markets, but they encounter several challenges, including high shipping costs, complicated customs procedures, and cumbersome returns management. To address these issues effectively, we must implement global best practices and establish dedicated export facilitation mechanisms. This includes adopting forward-deployed strategies to streamline returns, leveraging digital tagging for better tracking and management of shipments, and enhancing our overall logistical infrastructure. By tackling these challenges head-on, we can simplify the export process and significantly boost the ability of our MSMEs to compete and thrive on the international stage.” 

Mr. Bhupen Wakankar, Director - Global Trade,  Amazon, said, “E-commerce is unlocking vast global opportunities for Indian MSMEs to tap in large consumer demand across the world. This demand stretches across categories like Home & Kitchen, Apparels & Textiles, Consumable Products, Toys and many more categories. The application of technology in cross border logistics, payments as well as in areas like market access and market intelligence has been instrumental in helping Indian MSMEs expand their reach beyond domestic borders.  The government's proactive measures, including the recent announcement of Ecommerce Export Hubs and ongoing investments in digital infrastructure, are pivotal to this growth. These initiatives are set to provide essential support for businesses navigating international trade complexities. Continued support and simplification in areas such as customs compliance, cross-border payments, and logistics will further accelerate the growth of this sunrise sector.”

Mr. Vinod Kumar, President, India SME Forum, said, “In today’s interconnected world, the global marketplace offers unprecedented opportunities for Indian MSMEs to thrive. The path to successful international expansion lies in addressing key challenges like customs compliance, logistics, and cost management. By harnessing the power of digital tools to understand and meet customer preferences, and by advocating for policy reforms to ease export processes, we can empower our small and medium enterprises to compete and excel on the global stage. It is through such concerted efforts that we can transform the potential of Indian MSMEs into tangible success stories across borders.”