COLLABORATE TO INNOVATE. Promoting Cross Border E-Commerce for Indian MSME Sector

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1 EDITION VII COLLABORATE TO INNOVATE Promoting Cross Border E-Commerce for Indian MSME Sector A MSME Product MADE IN INDIA Team: Solo Athlete College: IIM Shillong

2 Solution To address the problem at hand How to increase B2C Exports from India in MSME space Identification of Products & Markets Establishing E-Commerce Industrial Park Miscellaneous Recommendations Analysis of CBT Pillars for B2C Trade Marketing & Branding One Nation One Brand Gifting Strategy MSME Education Niryat Mitra Niryat Saathee Niryat Prakaashan Niryat Parichay Niryat Jaagrooktha Niryat Abhyasika 1

3 Identification of Products & Markets Exports in FY18 $ 300 Billion MSME s contribution 40% MEIS E-Commerce Scheme Potential categories identified in B2C CBT for Indian MSMEs: 17, top 4 are Gems & Jewellery Handicrafts Books Cust. Garments Auto Parts Handlooms Toys Leather Goods Rationale of products in this scheme is based on higher preference of consumers to buy in CBT or in B2B trade Footwear Apparel Markets Parameters for classification Online Shopping E-Shopping penetration Average spending/ buyer Digital Buyers Absolute no. of buyers Growth rate List of markets analysed on above parameters is mentioned in Exhibit 3 Mapping of products and markets. Source: Amazon, FICCI Categories/ Products Target Market Clothing and footwear Russia Books Australia, South Africa Jewellery Thailand, South Africa Toys Chile, Brazil Sports goods Turkey Mapping of complete list of products and markets is in Exhibit 4 2

4 CBT E-Commerce Industrial Park 23 TEE locations with potential B2C categories 13 North Region 6 South Region 4 West Region CBT E-Commerce Industrial Park: Collaboration Model MSMEs/ Cluster(s) E-Commerce Marketplace(s) Logistic Service Provider(s) Govt. Agency(s) North Region Panipat Jodhpur Gurugram Locations West Region Surat Ahmedabad South Region Tiruppur Ambur Facilities includes whole industry chain of CBT E-Commerce like warehousing, customs clearance, training centre etc. 3

5 CBT Pillars Analysis of Technology & Internet pillar CBT E-Commerce Pillars Technology & Internet Infrastructure & Customs Logistics & Supply Chain Policies & Schemes E-Commerce Readiness IIFT survey on MSMEs Use of computers with internet: 60-70% workforce Major communication mode with buyers: Website for products display, not transaction enabled Challenges in E-Payment System Lack of financial inclusion Poor knowledge Time consuming & costly Privacy & security concerns Internet penetration India 40% Rural 21% Technology & Internet ICT Barriers for MSMEs Cost & lack of awareness Poor physical infrastructure Data Localization India vs. World Privacy and Efficiency SMAC: Social Mobile Analytics Cloud Globallinker by FIEO 4 Positive Negative Can t say

6 CBT Pillars Analysis of Infrastructure & Customs pillar Single Window Interface for Facilitating Trade SWIFT helps in providing one stop interaction place with 40+ Govt. agencies Postal Bill of Exports PBE I/ II & CN-22 From 21 st June 2018 onwards Zero rating in GST Sale of Goods in CN22 Multiple Invoice Copies Invoices for a single product shipment are India Post: 3 Private Courier: 7 Customs Shipping Bills Issues esanchit Paperless processing under SWIFT From 1 st Sept onwards esanchit for exports implemented on pilot basis Courier Shipping Bill V Boon for Exporters Efficient Less paperwork GST compliant Indian Customs EDI System Majority of ICES locations in TEE are operated on WAN bandwidth < 512kbps 5

7 CBT Pillars Analysis of Logistics & Supply Chain pillar First Mile logistics Logistics flow of CBT B2C shipments Fulfilment Suppliers of E-Tailers Warehouse in park Indian Customs Transportation Foreign Customs Overseas Overseas Warehouses Shoppers Processing/ Sorting Line-haul Delivery Last Mile Delivery Pain points in postal services Long delivery lead time Expensive for goods return Tracking & tracing issues National Logistics Information Portal by DoC Announced in FY19 Union Budget, it can reduce costs and processing time India ranked 44 in Logistics 44 Performance Index, 2018 Inefficient local supply chain infrastructure Poor infrastructure in terms of connectivity/ courier services to nearest customs location E-Commerce Connectivity Index Research study on E-Commerce connectivity between India & other countries is need of the hour (recommended to Govt. agencies) 6

8 CBT Pillars Analysis of Policies & Schemes pillar Policies/ Trade Agreements Foreign Trade Policy e-brc, e-iec, AEO are some of the initiatives undertaken Global Trade Agreements AIFTA, CECA, CEPA, RCEP E-commerce trade rules were never part of TAs except RCEP RTA & India s Exports India s efficiency of using RTAs to its favour is less. Exhibit 7 has India s exports and imports performance after signing RTAs with ASEAN etc. Schemes MEIS E-Commerce Reward Revised on 27 th July 2018 to Rs. 5 Lakh/ shipment from Rs. 25K Niryat Bandhu Scheme Hand Holding for Exporters Mentoring budding exporters on foreign trade by DGFT, EPCs Diwali Gift - MSME exporters On 2 nd Nov 2018, Govt. increased interest subvention on loans for MSME exporters from 3% to 5% 7

9 Miscellaneous Recommendations SWIFT Mechanism for IGST & ITC Instant Tax Refund (Ex: E-Wallet) Delay in tax refund hampers the working capital of MSME exporters MEIS E-Commerce Reward Updating Products in Scheme Products with higher exports share like Gems & jewellery, Auto parts etc National E-Comm Policy Draft Facilitating Cross Border Trade GOI should facilitate GeM like portal exclusive for MSMEs Cross Border E-Commerce Zone Comprehensive Test Area Project focusses on streamlining process in logistics, warehousing, customs and approvals Clusters Collaboration Niryat Mitra Mobile App Exchange of knowledge across same product segment MSME clusters in different regions 7

10 Marketing & Branding A MSME Product MADE IN INDIA One Nation One Brand - MSME Promote all Indian MSME products under one brand to carve Brand India niche Brand Identification & Recognition Steps to overcome identity crisis Mo-MSME support to Indian MSMEs to participate in global trade fairs is very minimal. Ex: In , Global trade fairs approved in IC Scheme are <100 whereas in China alone global trade fairs are planned Marketing Gifting Strategy MSME products to foreign officials Indian & foreign officials meetings is an opportunity to give gifts resulting in publicity for product Credentials Campaign Hum Kisise Kum Nahi Hai Ease of Doing Business Index Zero Defect Zero Effect (ZED) Facts & figures on backbone of Indian economy 9

11 Educating MSMEs & Conclusion MSMEs Education (Niryat Programmes) Niryat Mitra Reach MSMEs Digitally Increasing MSMEs enrolment on mobile app Niryat Parichay Inductions/ Workshops Agencies to conduct category level inductions with Star Status Holder Niryat Abhyasika Study/ Training course Enable new generation workforce for MSMEs Niryat Saathee Intermediary Partners Private players reach clusters at faster rate (Annexure 1: Amazon Ad) Niryat Jaagrookta Awareness Workshop Awareness on latest practices Niryat Prakaashan Publications Research reports in vernacular languages CONCLUSION CBT E-Commerce is different from traditional trade, Govt. must recognize B2C exports as sector to collect data on it Stakeholders must be up-todate on latest tech, infra, policy environment and immediately adapt to ecosystem dynamics Poor awareness of MSME products among global customers to be addressed with branding, promotional activities Adopting new modes of business comes at a cost, so educate MSMEs on infinite opportunities E-Com. can offer 10

12 Think Global, Act Global If India buys online, Indians must sell online Goods will be Made in India as well as sourced globally THANK YOU!