Amplifying e-Commerce Will Help MSMEs Improve Online Reach

Speaking on the rocky road caused by the COVID-19 pandemic, Kumar showed the tectonic shift in various spheres of the lives by impacting the economy, businesses, healthcare, kids’ education, entertainment, travel, etc. In his view, the diverse digitalization, better use of technology, and advocating sustainable eCommerce can put businesses afloat in the ongoing grim situation.

He opined that during the pandemic, digitalization and sustainable services, including e-commerce, fintech, edtech, medical teleconsultation, online entertainment, virtual travel, and work-from-home are the new rays of hope. In fact, during such harsh times, several innovative, aspiring, and tech startups have put the country’s potential to the top lists of the most extensive startup map. The most significant pressure has been faced by Micro, small and medium enterprises (MSMEs) as they lack many aspects of business operations and connecting with end consumers. The thriving use of technology and digitalization can show them the best way to survive by automating and streamlining their processes, inventory management, and interface with markets directly or indirectly in the eCommerce ecosystem.

Thankfully the situation is improving as the country’s economy returns to its normalcy. However, the experience forces the government to look beyond and make necessary reforms to retain current growth. For doing so, the country needs to bolster its eCommerce sector by creating a space for MSMEs that reasonably accounts for about 30% of India’s GDP while constituting more than 40% of exports. According to reports, only 10% of Indian MSMEs sell online, and the majority of them are unregistered. However, business formalization has started, yet small businesses may need to swim across the hurdles. 

There is a hue and cry over easing the Goods and Services Tax (GST) rules for all the industries by making them more chances, competent costs, and processes.

According to recent estimates, all offline businesses having annual turnover under Rupees 40 lakh and engaged in inter-state sales must get GST registration to sell their products online. Additionally, offline sellers having Rupees 1.5 crore turnover with inter-state sales cannot continue with simplified GST compliance processes under the GST plan if they nurture online dreams. This creates chaos and a point of disappointment for offline sellers losing to their counterparts.

The current GST framework doesn’t allow small businesses to smoothly transition from conventional sales to eCommerce platforms due to complex registration and other issues, depriving them of access to a more fantastic customer base online to successfully fulfill their online dreams. MSMEs usually need to undergo time-taking and burdening compliance rules and regulations that lead to frustrations and disappointments. Think of a farmer or artisan undergoing a series of complexes just to reach the platform; isn’t it unfair on his part? The process gets worse by the mandatory monthly filing of taxes and much. 

Even though the government might be trying to limit the registration to reduce the compliance burdens for small retailers, the discrepancy between registration hurdles for online and offline conventional sellers proves to be a significant roadblock for small businesses who want to make big money online. The problems faced by MSMEs may further cause the government a heavy loss of indirect tax revenues.

In Kumar’s opinion, to overcome the situation, there is a greater need to ease the regulations of the GST regime in the interests of small suppliers both online and offline. All MSMEs should be made liable for GST at the threshold value, irrespective of the business model. Brining a parity between online and offline sellers needs a logical and integrated approach to benefit the entire eCommerce ecosystem. Making necessary amendments while allowing small offline sellers to sell online without any mandatory GST registration will increase the income tax for the government, bringing transparency and improving efficiency for tax collection.

As the country is all set to lay out a new success formula post-Covid-19 pandemic, creating a GST policy that equals and offers opportunities to all offline and online sellers will be helpful to. It further requires a focused approach to reduce the compliance burden on small players coupled with other issues to be addressed to strengthen the economy's pace.