New Central rules will impact MSMEs hard
83% MSMEs shifted to e-commerce during pandemic
A majority of the 23 lakh micro, small and medium enterprises (MSMEs) in Telangana state will be hit hard if the draft rules proposed by the Union consumer affairs ministry to ban flash sales, promotions and advertisements by sellers through e-commerce are implemented.
According to a survey in the state, 83 per cent of MSMEs said they had shifted to e-commerce mode of business during the pandemic. Due to the negative impact of the lockdown, 25 per cent of them were on the verge of losing significant revenues.
The shift to e-commerce in the last one year has been difficult, and many of them are still in the process of creating their own websites and pages on social media. There are approximately 56 per cent MSMEs in rural areas who are into village art, pottery, weaving, khadi, cloth, handicrafts and many others which are slowly using innovation and technology to reach out to their consumers. In the urban areas, 44 per cent MSMEs include food processing, cloth, handicrafts and a large variety of homemade products.
According to a recent poll by India SME-Forum, 83 per cent sellers in the state were of the opinion that the draft e-commerce rules need to be reconsidered. There is a fear in the industry that if the draft rules are implemented in their present form, MSMEs in the state will incur losses of an estimated `11,487 crore.
The consumer affairs ministry has proposed appointment of a grievance office, a chief compliance officer, a nodal contact officer along with a law enforcement agency.
It has also stated that it will be mandatory for MSMEs to register for flash sales, promotions and other sales with the department for promotion of industry and internal trade.
Vinod Kumar, president of India SME Forum, said, “Amendments will increase the burden of compliance and make the market inaccessible to small and medium businesses. It is important for the government to revisit the rules and detangle the complexities.” With startups, small businesses and micro businesses learning the new methods of ecommerce to reach out to consumers, there is a demand that they must be assisted. Technological innovations must be used to aid them as they incur expenses of courier, delivery charges, transportation, packaging and also bear the damage for products. These for the small enterprises are a huge expense.
With the ongoing pandemic, the shift to e-commerce has its hidden challenges in terms of promotion, targeting of products to the right audience, dealing with consumer comparison of the existing range and price sensitive market. These challenges are not being observed or understood as they are hidden in the glow of the new market which makes everything look very appealing.
Nitin Wali of Digital Evangelist said, “The ecommerce industry has grown in the pandemic and it has given businesses a means to survive. Going online is easy and relevant and by bringing rules which will discourage entrepreneurs it is taking a step back. There is a need to re-think of ways and means to make it easy for new businesses to come online.”