SMEs set to gain as E-commerce grows

The E-commerce industry has witnessed unmatched growth of 150%, increasing from Rs. 19,249 crores in 2009 to Rs. 47,349 crores in 2012.

June 18, 2014 4:09 IST | India Infoline News Service
FDI in E-commerce is all set to reshape the contours of small and medium enterprises. Industry watchers estimate that the business growth potential for SMEs and small trade and business is set to double with E-commerce coming into full play. 
The E-commerce industry has witnessed unmatched growth of 150%, increasing from Rs. 19,249 crores in 2009 to Rs. 47,349 crores in 2012. This growth has pulled in an increasing number of small retailers and manufacturers in the net and ancillary growth has risen almost equally in this duration.
Reiterating the importance of liberalising the E-commerce industry, Kiran Karnik, Chairman, CII National Committee on Broadband & Telecom said "SMEs are pivotal to the manufacturing sector in India. 
They need incentives and modern technology to enable them to achieve global competitiveness. E-commerce is providing them these platforms in a cost effective way. Any policy which restricts E-commerce will also create limitations for the growth of SMEs. It is therefore of critical importance to create the right policy environment for the liberalisation of B2C Ecommerce and its positive effects on the SME growth.
According to Shubho Ray, President, IAMAI, Various entrepreneurial ventures have mushroomed by virtue of opportunities provided by e-Commerce. E-tailing, which is just 16 percent of the e-Commerce market today would grow to 30-35 percent by 2020 and is estimated to generate employment for around 1.5 million people by 2020. It has a huge potential for generating livelihood within the industry as well as in the auxiliary industries such as logistics, media etc. E-Commerce has provided the SMEs/MSMEs with an opportunity to reach out to millions of customers across geographies. The marketplace platforms helps them jumpstart their business with minimal investment.
Countering the campaign mounted by a section of retail trade bodies, which is trying to raise the old bogey of losing retail jobs, most industry players feel that the members of CAIT would do well to remember the speech of PM Modi at their own conference in February this year where he exhorted small and medium retailers to embrace E-commerce as a partner in growth and profitability. E-commerce is complementary to retail and small business and not detrimental.

E-commerce is a growth booster for SMEs. Industry bodies agree.
Over the last few months E-commerce players have been urging the government to formally allow FDI in the sector to enable the industry to access foreign capital and expertise. The players consisting of mostly first generation entrepreneurs have underlined the need to remove sector based barriers in business to consumer E-commerce citing need to enable inflow of foreign capital, expertise and knowledge that will propel the Indian E-commerce industry into its next phase of growth.
R Chandrashekhar, President, NASSCOM, Kiran Karnik, Chairman, CII National Committee on Broadband & Telecom and leading corporate leaders like Bhaskar Pramanik, Chairman, Microsoft India at a recent roundtable conference have all made a strong case for FDI in B2C Ecommerce.

Small/Medium players views on FDI in Ecommerce:
Manmohan Agarwal, CEO, Yebhi.com, an E-commerce player said, The Indian E-commerce industry is poised to cross USD 50 Billion mark and India has the potential to become one of the largest markets for E-commerce. However, heavy investments to the tune of tens of billions, is required to fast track growth of the industry and help realize its full potential. Foreign direct investment in e-commerce will boost infrastructure development and spur manufacturing facility besides bringing in the much needed investments.

Aasheesh Mediratta, CEO Fashionandyou.com said, PM Narendra Modi has already indicated the potential of the Ecommerce industry and its impact on the way business and trade will be conducted in future. We look forward to his government reviewing the current policy and enabling FDI for B2C Ecommerce so that the industry can scale global heights like its Chinese and other emerging market counterparts.

Punit Sindhwani, Co-Founder, Mirchimart.com said, SMEs are playing a large role in bridging the divide between large and small cities - giving people in small towns a choice to purchase items of choice easily. Research suggests that e-commerce is growing at a faster rate in tier-2 and tier-3 cities clocking an average of 40% growth YoY.
Pradeep Katyal of Utsavfashion.com
 said For an SME player like us, e-commerce has been a boon, having given us access to the lucrative international market. Today over 90% of our business is from overseas which has helped us earn about Rs.100 Cr foreign exchange for the country. Also, in turn, we source 100% of our merchandise from SMEs (small vendors and local manufactures) who are seeing their business grow exponentially. Opening up the e-commerce sector to FDI will give a big boost to the entire SME sector.

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