MSMEs Trends: Integration with E-Commerce

According to the Annual Survey of Micro, Small, and Medium Enterprises (MSMEs) in India released by Indian Council for Research on International Economic Relations (ICRIER), it was accentuated that e-commerce-integrated MSMEs are doing better off than those who are not integrated.

Its findings stated that MSMEs, which use e-commerce platforms for sales, typically tend to be operated and owned by younger and more educated individuals.

Comparing export-oriented MSMEs to non-exporting businesses, it was discovered that a majority of them were integrated with e-commerce platforms, demonstrating a positive correlation between the companies' export propensity and e-commerce adoption.

The e-commerce integrated MSMEs typically perform better on critical performance measures including turnover, profitability, and proportion of employment benefits than non-integrated ones.

Working with e-commerce platforms enables MSMEs to reach more customers and span a greater geographic area, hence removing significant barriers to their expansion. It highlighted the importance of digital transformation for MSMEs to grow successfully and broadly.

MSMEs identified a number of issues, including bottlenecks in the physical infrastructure, product returns after delivery, lack of access to capital and skilled labor, and the problem of delayed payments.

However, the survey found that government policy support was important to enable the integration of MSMEs with e-commerce platforms. Central and State governments had launched numerous schemes in order to provide financial assistance, access to technology and upgrading facilities, infrastructure development, skill development, and training, the report noted.

The respondents, according to the research, firmly believed that MSMEs needed their programs to be consolidated and rationalized. MSMEs also emphasized the need for better coordination between the central and state governments and emphasized the importance of a comprehensive MSME policy so that businesses could locate all of the relevant incentives and programs in one location.