Nitin Gadkari, the Union Minister for MSME, announced the government’s decision to launch an e-commerce portal in India called ‘Bharat Craft’ at the 6th India International MSME Expo this Friday. Bharat Craft will be modelled after the exceptionally well-known Chinese e-commerce portal Alibaba.
According to Gadkari, the portal’s purpose is to create a platform for Indian MSMEs to sell their goods in order to amplify the industry’s growth. It is hoped that the initiative contributes to the Modi Government’s five trillion economy aim for India.
At the moment, MSMEs makeup 29% of India’s GDP and have generated job opportunities for about 11 crore people. The goal is to boost their contribution to GDP to 50% and create employment for 15 crore people. In keeping with this, it is estimated that the portal’s net revenue could amount to nearly 10 lakh crore in its first 2-3 years of operation. Additionally, an e-commerce portal will also increase MSMEs share in exports.
The government has also promised to tackle the issue of small businesses getting delayed payments from larger companies. Gadkari revealed that a committee has been appointed to look into this phenomenon. The goal is to set up a legislative framework that makes it compulsory for companies to pay small enterprises within 45 days of bill generation. The failure to do so has legal repercussions such as fines. This will hopefully immune MSMEs from shutting down too soon.
Several provisions have also been made to encourage MSMEs.
Small businesses can now register themselves on the Udyog Aadhaar Portal. Registering comes with perks such as loans with lower interest rates and tax subsidies.
Samadhaan, a website where businesses can report their problems has also been set up to establish a line of communication with entrepreneurs.
At present, The India eCommerce market is completely dominated by US-based Amazon.com. It is, however, estimated that homegrown eCommerce player Flipkart might surpass it soon. Besides there two leading players Bharatcraft will also be competing with Mukesh Ambani’s e-commerce venture. In the end, factors like the quality of goods and services, as well as, the versatility of the portal’s catalogue will come in to play in determining its success.
How viable is this venture?
It is necessary to ask whether such a government-controlled eCommerce portal could actively compete with the already established eCommerce behemoths, likes of Amazon and Flipkart. In the face of the current recession and falling unemployment rates, the success of Bharatcraft becomes more crucial. And while nothing can be said at this point, certain events in the past year indicate potentially good prospects.
First and foremost, India is becoming increasingly digitized, in terms of internet availability and affordability. India is estimated to have 629 million internet users by the end of this year. At the same time, electronic payments have become more commonplace in the past few years and more and more people are accepting e-commerce as legitimate.
However, a more instrumental change took place earlier this year in the form of revised foreign trade policies. India’s foreign trade policies have now become stricter and are tailored to benefit local businesses.
One such change requires large foreign businesses to become registered bodies. Along with this, they are also required to let local businesses continue selling their goods on these platforms. This will make it harder for foreign players to sell their goods in India.
Another significant reform has to do with consumer data. Foreign online businesses are required to store data concerning Indian consumers locally and are also under the obligation to share these findings with smaller businesses. Indian authorities can now also refuse to share local consumer data with other countries.
From all of these, it is evident that all these reforms and policies are aimed at creating greater opportunity for local enterprises and entrepreneurs.