Niti Aayog’s Report on Boosting Exports from MSMEs

Context: The Niti Aayog released a report on boosting exports from Micro, Small and Medium Enterprises (MSMEs).

Findings of Niti Aayog’s Report on Boosting Exports from MSMEs

• China vs. India in E-commerce Exports: China exported goods worth $200 billion through e-commerce in 2022, while India’s exports through the same channel stood at only $2 billion.
  • The report attributes this disparity primarily to India’s cumbersome export compliance processes.
• MSME Contribution to Indian Economy: MSMEs are reported to account for 38.4% of India’s manufacturing output.
  • They contribute 45% to the country’s exports.
• Concerns Over Data Reliability: The report expresses concerns that the current estimates of MSME contributions to exports are likely inflated and unreliable.
  • This scepticism stems from reliance on outdated lists of reserved sectors for MSMEs for data collection.
• Potential Export Sectors for MSMEs: The report identifies several sectors with a global demand of more than $340 billion where Indian MSMEs could compete effectively.
  • These sectors include handicrafts, handloom textiles, ayurveda and herbal supplements, leather goods, imitation jewellery, and wooden products.

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Recommendations for Facilitating E-commerce Exports in India

• Simplification for Smaller Firms: Streamline merchandise trade processes for e-commerce exports.
  • Establish a single national trade portal for all approvals and compliances.
• Addressing Compliance Challenges: Simplify the cumbersome compliance process associated with exports.
  • Focus on streamlining payment reconciliation, especially for new/small exporters.
• Clear Distinction in Exporter Roles: Create a clear distinction between “Exporter on Record” and “Seller on Record” to clarify responsibilities and potentially simplify the process for MSMEs.
• Financial Reconciliation: Introduce an annual financial reconciliation process to streamline financial operations and reduce administrative burdens.
• Duty Relief on Returns: Exempt import duties on returned goods (rejected goods) to ease the financial burden on MSMEs dealing with unsold inventory or customer returns.

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