A recent ICRIER survey has revealed that there exist survival threats for MSME enterprises in India that are unable to integrate their businesses with e-commerce platforms.
Key Highlights
- Sales and profitability of MSME enterprises that were integrated with e-commerce platforms were better than the ones not integrated.
- Integration with e-commerce platforms led to easier access to unsecured loans.
- The digital gap within the MSME sector could lead to some enterprises gaining at the cost of others.
A recent survey by the Indian Council for Research on International Economic Relations (ICRIER) has revealed that MSMEs not integrated with any e-commerce platform may face a survival threat in future as the commerce gets more digitalised.
The survey was conducted by the organisation with a sample of MSMEs across various sectors, half of which were integrated with e-commerce platforms and half not.
It revealed that the integration of businesses with e-commerce platforms not only provided better visibility to market access to businesses but also led to higher profitability due to digitalisation.
The survey also found that among the businesses selected, the ones that were integrated with e-commerce platforms also found it easier to access finance. Businesses that had linked their sales on e-commerce platforms found it easier to get unsecured business loans wherein their earnings on the platform increased their creditworthiness.
Incidentally, the ONDC network too is poised to offer GST-based loans to businesses on the network.
Significantly, the survey also revealed that MSMEs that weren’t integrated with any e-commerce platform also believed that an integration would’ve helped them access business loans easily.
Survival threat for MSMEs
The ICRIER survey mentions that the non-integration of MSME enterprises with e-commerce platforms was not because of aversion to digitalisation but the lack of knowledge of digital technologies.
This acts as an impediment not only in terms of access to e-commerce platforms but also in other aspects of digitalisation, for example, digital payments.
This is proved in the study as well, with non-integrated enterprises majorly functioning on cash-basis.
The study believes that businesses that can better leverage technology may capture the market earlier than the ones that are not digitalised, putting the latter at an advantage.
Thus, the study emphasises the need to bridge the gap between digitalised MSME enterprises and those unable to capitalise upon the digital technologies available through training and accessible infrastructural services.
