
NITI Aayog identifies hurdles in e-commerce
As India moves closer to becoming the world’s third-largest economy by 2028, its business landscape is evolving rapidly. A report by NITI Aayog highlights the increasing role of Micro, Small, and Medium Enterprises (MSMEs) in driving the digital economy, with e-commerce playing a key part in this transformation.
E-commerce platforms are proving to be a game-changer for MSMEs by giving them easier access to markets, cutting costs, and streamlining supply chains. Even small artisans and entrepreneurs can now sell their products to global customers without needing a physical presence in multiple locations.
Data shows that India’s e-commerce market is expected to grow significantly over the next five years, and MSMEs are poised to benefit the most from this growth. However, only a small percentage of MSMEs are currently taking advantage of e-commerce compared to India’s vast manufacturing sector.
While e-commerce offers immense potential, MSMEs face several hurdles in fully embracing it:
- Indian MSMEs export only about $2 billion annually through e-commerce, much less than their potential.
- To sell in multiple states, MSMEs need separate GST registrations for each state. The recent biometric verification requirement adds another layer of complexity.
- A 2023 GST waiver for e-commerce sellers with revenues up to ₹40 lakh applies only to sales within one state, limiting the reach of many businesses.
These issues make it harder for MSMEs to expand across states and tap into global markets and to help MSMEs succeed in e-commerce, certain steps need to be taken:
- A single GST registration valid across all states would reduce the paperwork and make interstate sales easier.
- Reducing barriers like complex certifications and high import duties would make it simpler for MSMEs to sell globally.
- Programs to train MSMEs in using e-commerce platforms and digital tools can help them compete more effectively.
- Efforts should focus on connecting MSMEs with international supply chains, giving them opportunities to scale their businesses.
E-commerce has the power to transform MSMEs by giving them better market access, lowering their costs, and making it easier to do business. For this potential to be fully realised, there is a need for policies that support innovation, simplify regulations, and encourage global participation.