Trade, import and export for MSMEs: A digital single window for goods to move faster through customs, recognising online trade with countries India has trade agreements, raising ‘De Minimis’ threshold (value up to which no import duties or taxes are collected) for returned products, and easing the burden of import duties for returned goods, etc., can boost e-commerce exports, especially for MSMEs, said a report by MSME body FISME and research firm IKDHVAJ Advisers on Tuesday.
Moreover, the association also suggested the government’s postal system India Post may partner with private logistics companies, greater adoption of IT-enabled services that leverage efficiencies in scale and aggregation to provide volume discounts and working closely with other countries in order to harmonize shipping platforms between them can also boost MSME e-commerce exports.
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For example, India Post can collaborate with the private sector to create interoperable tracking systems that both the public and the private sectors can utilize. “Creating inter-operable tracking systems would enable merchants and consumers to keep track of their packages throughout the shipping process and will also improve the reliability of delivery,” the report noted.
“Less than 1 per cent of MSMEs participate in exports because micro enterprises constitute 99 per cent of the MSME universe registered at the Udyam portal. These enterprises find exporting their small consignments through traditional channels not only onerous but infeasible. Exporting through e-commerce route brings a shining ray of hope for millions,” said Anil Bhardwaj, Secretary General, FISME in the report.
The study outlines concerns faced by MSMEs around how e-commerce exports face high return rates as customers are unable to examine products beforehand. Returns are treated as imports and face import duties, resulting in high logistics costs and product disposal. Additionally, MSMEs lack digital skills and information on support tools, and there’s no comprehensive guide to e-commerce export procedures.
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To further reduce costs of e-commerce exports, the report recommended lowering charges for Export Data Processing and Monitoring System (EDPMS), easier reconciliation of remittances for export receipts from abroad through a reassessment of the current 25 per cent variation between exports and payments, raising the 9-month limit on receiving payments for exports for e-commerce, exploring closed-loop payment mechanisms with countries where India has initiated rupee payments.
“Given the present low participation of exporters in e-commerce, a wider scale of training opportunities to improve capacities of MSMEs to participate more extensively in e-commerce would expand the reach and scope of these exports. While the government and platform owners such as Amazon do provide such training, it needs to be done on a more widespread basis in each district through industry associations under the one product one district initiative,” the report added.