How SMEs can transcend international boundaries with ecommerce

Small and medium businesses (SMBs) have emerged as the real force for change in India’s economic dynamics in the last few years. These businesses contribute significantly to economic and social development by encouraging entrepreneurship, innovation, and creating employment opportunities. Moreover, the products and services generated from these Small and Medium Enterprises (SMEs) and Micro, Small, and Medium Enterprises (MSMEs) complement large industries and, in turn, contribute significantly to the country’s industrial development.

SMBs and e-commerce- the perfect partnership
The opportunity that e-commerce offers to SMBs today is disruptive. According to a World Economic Forum report, India is poised to become the third-largest consumer market behind only the US and China; consumer spending in India is expected to grow from $1.5 trillion to nearly $6 trillion by 2030. The pandemic has accelerated this prediction. Through websites and apps, businesses can reach out to a much wider audience, serving their requirements much faster.

Technologies that run behind e-commerce have empowered SMBs to break geographical boundaries. And as e-commerce reaches deeper beyond urban India, incremental growth is expected from these markets in the coming years.

Today, just-in-time manufacturing, same/next day deliveries, and even 10-minute deliveries have become the norm. It’s not difficult to see that SMEs and MSMEs are in a sweet spot to transcend international boundaries. The SMB clusters in India’s tier two & three markets are going to drive a large part of India’s $5 trillion economic goal. And logistics will be a crucial enabler for businesses.

Role of the logistics sector

There is no denying that logistics sector is a critical cog in moving goods, whether it be moving raw materials, finished goods or through e-commerce. However, there are challenges such as lack of access to know-how and compliances for cross-border trade.

The government has taken steps to overcome this challenge by launching platforms such as IndiaXports by India SME forum that brings information to businesses looking for business opportunities to export. Complexity in supply chains of some industries such as gems and jewelry, aerospace, and healthcare requires competencies of a global network, technology tools for visibility, and consistency in the supply chain for these businesses to compete in international markets. An uninformed decision by enterprises may result in high marketing and opportunity costs of targeting the wrong market and missing the right one.

Government initiatives to promote SMBs

In recent years, the government has introduced initiatives to advance SMB growth and participation in international trade. The government’s thrust on technology adoption and launch of programs such as ‘Make in India’ and the ‘Atmanirbhar Bharat Abhiyaan‘ (Self Reliant India Campaign) seeks to promote business and local manufacturing; a pivot for SMBs and the Indian start-up ecosystem.

In addition, government bodies at various levels have been working to develop districts as export hubs – another important initiative considering foreign trade today constitutes 45% of India’s GDP. In 2019, the government decentralized export promotion – a move that empowered State governments to play an active role in the decision-making process of promoting goods and services produced at the grassroots level.

A key objective behind the move was to enable SMBs to participate in international trade opportunities, build an efficient ecosystem of innovation, reduce transaction costs for the exporter and build platforms for the global reach of products and services through e-commerce. All these efforts have been ultimately designed to shift focus on district-led export growth for self-sufficiency and self-reliance – an Atmanirbhar Bharat. While these initiatives will enable small businesses to compete globally, high-quality product standards must be maintained. After all, the creation of the brand India in the global marketplace will be a combination of several factors.

National Logistics Policy and PM Gati Shakti Master Plan to give a fillip to exports

The government has introduced various initiatives to accelerate the country’s competitiveness further. In 2021, PM GatiShakti was launched to ensure that investments in infrastructure are well coordinated, with a more granular focus on developing logistics infrastructure and establishing multi-modal logistics facilities. On Sep 17, Prime Minister Narendra Modi announced the long-awaited National Logistics Policy (NLP), which aims to streamline shipping and lower costs throughout India.

The NLP has been placed within the umbrella of the PM GatiShakti Master Plan and aims to bring down India’s logistics costs below 10 percent from the current 13-14 percent of GDP*. Collectively, these policies are designed to help strengthen the participation of SMBs in international markets in three significant aspects: connectivity, technology, and efficiency. NLP, along with GatiShakti, promises to help increase the competitiveness of domestic goods in the global market, encouraging businesses to strengthen their exports from India and create new employment opportunities.

SMBs are at an exciting intersection when government policy and marketplace opportunities can boost their success. The right partner can help navigate these opportunities with expertise in cross-border compliance, technology tools for visibility throughout the supply chain and an agile global network. All of this combines to make doing business across international borders as easy as doing business across town.

(*As per the report titled ‘Developing Districts as Export Hubs’ report issued by Directorate General of Foreign trade, Department of Commerce, and Ministry of Commerce and Industry in January 2021.)

(The writer Managing Director, Indian Subcontinent, UPS)

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