New Delhi: The correlation between economic growth and global trade is undisputed. This explains the impetus placed on trade across the world, with each country looking to increase its share in global exports. MSMEs in India currently contribute to over a third of the GDP today while accounting for about half of the country’s exports. The government has been focused on increasing the MSME share of overall exports. It will help small businesses benefit from the opportunities that cross-border trade offers, allowing them to scale operations exponentially and support the growth of our economy. Removing barriers and making exports easier is especially important at a time when millions of Indian businesses are emerging from the impact of an unprecedented pandemic.
The sheer size of the global market, the breadth of opportunity, and the headroom to scale have made exports an attractive business opportunity for Indian manufacturers and business-owners for decades. However, supply chain complexities, initial investments, cross-border payments and uncertainty of demand have often meant that the exports business is not for everyone. As a result, Indian businesses, especially the micro, small and medium enterprises (MSMEs) have traditionally limited their aspirations with respect to exports. In the last few years, however, the wider availability of the internet and evolution of technology have brought in a transformation to the exports business. Today, e-commerce exports have lowered the entry barrier for Indian MSMEs to enter, experiment and win in global markets. Imagine, an Ayurvedic supplement manufacturer selling directly to customers in the UK or schools in the US purchasing ‘Made in India’ STEM toys and make it part of their curriculum.
Closer to the ‘customer’
E-commerce exports or Direct to Customer (D2C) exports enable businesses to sell directly to customers abroad. It simply helps businesses transcend boundaries and open a much larger pool of customers, providing an easy to adopt and scale mechanism for MSMEs to grow their business outside India, without having any footprint locally in the foreign region and reducing dependence on intermediaries — bringing the ‘seller’ closer to the ‘customer’. One of the biggest challenges that the traditional channels of exports presents is the inability of smaller businesses to participate in the process. E-commerce creates a level playing field for any kind of business to access foreign markets. This can happen in a couple of ways — one, where businesses can set up their own websites, take and fulfill orders on their own and second, where they onboard themselves on to e-commerce websites which have presence in global markets and benefit from their presence both in terms of incoming customer traffic and infrastructure support.
E-commerce exports allow businesses to test the waters and identify how products fit into the needs of customers in other cultures. By running experiments directly with customers in small quantities and with lower upfront investments, businesses can establish product-market fit as well as stress-test all-important operational aspects such as buying, shipping, and handling of returns. Moreover, MSMEs get access to information needed to build a customer base, and understand their preferences almost real-time. To quote an example, NMK Textiles is a Maharashtra-based textiles company that has been exporting conventionally for over a decade. They adopted e-commerce exports with Amazon and launched a new brand called California Design Den to export high-end bed linen made in India and in the last 3-4 years have doubled their business selling to customers in North America and have since expanded to other global markets too.
Rising demand for Made in India products
Today, Made in India products from across categories are witnessing great demand in global markets; this demand cuts across traditional categories like textiles, herbal products, teas to newer sectors like toys, home and kitchen products and a lot more. The rising popularity for ‘Made in India’ products has also given rise to innovative customer use cases for the products, such as customers replacing creamers in coffee with ghee, using printed bedsheets as beach throws or using soap bars as shaving foam. Thousands of Indian MSMEs are already benefiting from this demand, helping them create a niche for themselves. We have seen many examples of Indian businesses across categories become globally popular brands in their own categories. Importantly, these businesses have a positive impact downstream on job creation and the economy overall.
The importance of MSMEs-led exports growth
As India gradually moves in the direction of economic self-reliance, the success of MSMEs and the sector’s contribution to exports will play a significant role in the Government of India’s vision for an ‘Atmanirbhar Bharat’. With easier market access and seamless logistics, e-commerce will be crucial for MSMEs to Make in India for India and for the world. With e-commerce exports, Indian businesses have an avenue to create an international identity for world-class products manufactured locally. We believe that e-commerce can play a big role in making exports easy and accessible for lakhs of MSMEs across India and take the local innovation and expertise global.
Abhijit Kamra is Director, Global Trade, Amazon India