The government must make it easier for smaller firms to export their goods through e-commerce platforms, simplify merchandise trade processes and establish a single national trade portal for all approvals and compliances, the Niti Aayog has recommended in a report on boosting exports from Micro, Small and Medium Enterprises (MSMEs).
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While China exported $200 billion worth of goods through e-commerce in 2022, India exported only $2 billion, and a key reason for this gap is the cumbersome compliance process associated with exports, especially when it comes to payment reconciliation, which is particularly challenging for new or small exporters, the government’s public policy think tank noted in the report.
Stressing that e-commerce resolves market access issues that are a significant obstacle hindering MSME exports, the Foundation for Economic Development, which was involved in formulating the report, said it was essential to create a distinction between ‘Exporter on Record’ and ‘Seller on Record’, introduce annual financial reconciliation process for e-commerce exporters and exempt import duties on rejects that come back as returns.
While MSMEs are said to account for 38.4% of India’s manufacturing output and contribute 45% of exports, the report’s authors reckoned that MSME export numbers were “almost certainly inflated” and needed to be more accurately measured. The current estimates were “likely unreliable” as they relied on an outdated list of reserved sectors for MSMEs, they wrote.
Indian MSMEs can compete in export markets in sectors such as handicrafts, handloom textiles, ayurveda and herbal supplements, leather goods, imitation jewellery and wooden products, which have a global demand of more than $340 billion, while their domestic market is considerably smaller, the foundation and the Niti Aayog highlighted.