To maximize the potential of the nation’s micro, small, and medium-sized enterprises (MSMEs), Niti Aayog has advocated for facilitating access to export financing and launching a concentrated effort to increase e-commerce export volume.
By modifying our business environment to enable smooth exports via e-commerce platforms and the resolution of critical aspects related to ease of doing business, we can potentially trigger a significant transformation of our MSME sector into a powerful engine of growth.
Niti Aayog demanded that MSME e-commerce exporters be granted “green channel” clearances as one of its six main recommendations. It claimed that, in contrast to China, India has not been able to use e-commerce to get around obstacles to market access. China’s MSMEs exported $200 billion worth of e-commerce in 2022, which is 100 times more than what MSMEs in India exported.
To increase e-commerce exports, it is imperative to distinguish between Seller on Record (SOR) and Exporter on Record (EOR), permit invoice value reductions for all e-commerce exports without imposing a percentage ceiling, establish an annual financial reconciliation process for e-commerce exporters, waive import duties on returns and rejects, consider exempting shipments up to $1000 from the reconciliation requirements until the National Trade Network (NTN) is put into place, and create a green channel clearance for e-commerce exports.
A government incentive package is needed to raise the current 10% uptake of ECGC (Export Credit Guarantee Corporation) schemes to 50% or higher. Lastly, a single market area where all export credit providers can vie for business and lower prices for MSMEs can be established, similar to the one for loans for higher education.
The current MSME export statistics are probably overstated and unreliable since they are based on an antiquated list of industries set aside for MSMEs. Any improvement must be started with precise measurement and ongoing impact monitoring. The central think tank has also advocated for a set period during which MSMEs would not be burdened by compliance requirements; any compliance mistakes should be overlooked while MSMEs gain experience in export markets.