EDITION VII

COLLABORATE TO INNOVATE

TEAM B SQUAD

IIM BANGALORE

EXECUTIVE SUMMARY

Objective Design a comprehensive strategy to give push to Indian B2C ecommerce exports by mitigating existing

issues and redesigning the approach towards educating and marketing them

Methodology

Primary Research

Conducted interviews with stakeholders like MSMEs, Ministry of MSME, DGFT

and Export Promotion Agencies and Academia

Secondary Research

Conducted secondary research to understand the

opportunities and challenges for B2C

ecommerce exports in India, Best Practices, etc.

Key Insights & Solution

Derived key insights from the primary and secondary

research to develop solution

Implementation Plan

Created the implementation plan along with financials

and metrics to measure the performance

Touchpoints

Current Journey

Issues

Best Global

Practices

Our Big Idea

Comprehensive

B2C eCommerce

Exports Policy

Project DISHA

Project VIHAAN

Comprehensive policy to

ensure coordination between

government bodies, private

players and MSMEs to drive

B2C ecommerce export

growth

MSME Education

Initiative

MSME Marketing

Initiative

SAMANVAY

We propose SAMANVAY, which, like its name, is an ecosystem which will ensure harmony

and coordination among the present disconnected bodies, processes and policies

SWIFT +

Single-Window

Technology Platform for

all stakeholders

Other stakeholders

Logistics, Infrastructure,

Payment, Technology

and ecommerce

providers

GLOBAL WATCH Best Practices in B2C eCommerce Exports

Lo

gis

tics a

nd

Infr

astr

uctu

re

Te

ch

nolo

gy

Po

licy

China USA UK Other interesting

practices • MSMEs classified as per their

credit worthiness, quality of

products, etc. to customise

export process

• Standard requirement and

product certification

• Standardized return policy

• Local govt. involved in policy

formulation & implementation

• Provincial-level MOUs

• Program to train exporters on

ecommerce competitiveness

• Networking programmes to

connect exporters new to

ecommerce to experienced

exporters

• Certified professionals to help

exporters in their marketing

initiatives

• E-Exporting Programme, which

is a national level apex program

has been launched to cover all

aspects of B2C export

promotion

• UKEF partnered with 5 major

banks to provide government

backed trade finance to SME’s

directly from their banks

• Cluster-level interventions for

logistics and infrastructure

requirement mapping

• 57.7% population has access to

internet facilities

• Federal government support to

state government to improve

surface infrastructure

• Heavy investments in logistics

77% population has access to

internet facilities

• National Productivity Investment

Fund of 31B Pounds to boost

infrastructure

• Heavy investments in Strategic

Rail Freight Network for

improving the logistics

• E-Port system - single window

clearance for faster customs

processing

• EDI system ensures faster duty

rebates and input tax credit

• Single window clearance for

faster customs processing

• Central repository of research

on countries to which products

can be exported, market trends,

etc.

• Online export assistance

• Single window clearance for

faster customs processing

• Bar coding to facilitate return

processes

• UKTI supporting the exports by

providing info through seminars,

webinar and events

• In Taiwan, SMEA

invites ecommerce

companies, payment

gateway providers and

exporters to common

conferences for

knowledge sharing and

networking

• In Korea, Taiwan and

China, a facility called

Bonded Warehouse

Model is used under

which products are

shipped in bulk to

warehouse and as

orders are received,

goods are released

CURRENT EXPORT JOURNEY To understand the current challenges

The issues identified at each stage have been discussed in detail on the next slide

1. Lack of awareness about Cluster-specific initiatives

2. Form CN22 of India Post has no option of ‘commercial shipment’

3. No government assurance to customers of quality of exports

4. Under MEIS policy, duty rebate is provided on order limit of Rs.

25000 and only 6 sectors & limited (air)ports covered

5. Cannot claim input tax GST refund

6. No nodal body exists to regulate the end-to-end process of B2C

exports

1. Lack of awareness about schemes, ecommerce process and

internet literacy

2. Privacy and security concerns, fear of e-payments

3. Loss of opportunity for exports to RTA (Regional Trade

Agreements) markets

1. Difficulty in getting finance for pre-shipment and post-shipment

2. No online tracking of order

3. Lack of physical infrastructure

4. Unreliable and expensive logistics providers

5. Multiple invoice copies required for customs clearance and tax and

duty rebates

6. Manual customs examination Infr

astr

uctu

re a

nd

logis

tics

Polic

y

Technolo

gy

Behavio

ura

l and

Mis

c.

1. Difficult to part with the Traditional Mode of Trade

2. Attempt to push products which are manufactured already

3. Lack of bar coding for goods and manual process

4. Lack of competitiveness in MSMEs

5. SWIFT portal is recently implemented and lacks integration

with key stakeholders

CURRENT CHALLENGES And how the current regulations are the cause

Current regulatory framework

Ministry of MSME Ministry of

Commerce CBEC

Marketing

Assistance &

Promotion Scheme

Tech &

Managerial

Consultancy

Cluster

Development

Program

QMS/QTT

Scheme MEIS SWIFT

India Post

Logistics &

Shipment

Caters to the training, marketing and cluster-specific analysis needs Monitors Exports of

MSMEs

Cater to the logistics, shipment

and clearance aspects

BODY

SCHEME/

POLICY

There are several government policies in place which are spread across the MSME’s journey of B2C exports. However, these bodies

don’t work in tandem, the policies and schemes are disconnected and the exporters are largely unaware of how they can benefit

from these. Further, there are several policy shortcomings. These together give rise to all these challenges.

Challenges in the journey of MSME exports

SAMANVAY Ecosystem Solution to boost MSME B2C e-Exports

*Discussed in detail ahead

In order to bring more sharing of information among the different bodies and leverage the existing regulatory framework, we need an ecosystem

SWIFT+ (Augmented Single Window Clearance Portal)*

Logistics, Infrastructure & Technology improvements

Logistics requirements – Bodies:

Private players like Amazon, e-Kart, etc. and government

players like India Post

Body: CBEC

Infrastructural requirements – Bodies:

Min of Urban Development, Min of Communication, Min of

Power, Min of Information and Broadcasting, etc.

1. Creation of better infrastructure like roads, rail transport

2. Making India Post more cost-effective, enhance

capabilities for hazardous materials (HAZMAT) and

defining policy to regulate private logistics players’ costs

3. CN22 form to have option of ‘Commercial Shipment’ so

that exporters can avail duty rebates

4. Integration of SWIFT+ with other portals as discussed

1. Improvisation upon the current SWIFT by adding

players like ecommerce & logistics companies, etc.

2. Focus on single-window clearance, removal of manual

processes from customs clearance, duty rebates, online

tracking, EDI tracking, etc.

World Customs Organizations

Customs process and infrastructure requirements

Comprehensive MSME e-Export Policy

PROJECT DISHA (MSME

Training & Dev Policy)*

PROJECT VIHAAN (MSME

Marketing Policy)*

1. Increase of MEIS limit and increase port coverage and

sectors, create dynamic sector list as per their performance

2. Regulations on e-commerce players wrt their dealings with

Indian MSMEs

3. Policy framework on Quality, Training & Marketing of MSMEs

4. Clear guidelines on tax and duty rebates

5. Provision of detailed plan on development of infra & logistics

Body: MSME Export

Promotion Council

Ministry of Skill Development Ministry of Commerce (DGFT)

Ministry of MSME (QMS/QTT,

Technical and Managerial

Consultancy Services)

Ministry of MSME (Mktg

Assistance & Promotion,

Cluster Dev Programme)

Body: MSME Export Promotion Council (Newly created)

Generate awareness about

government schemes, internet

and ecommerce literacy, etc.

Provide market trend info,

cluster-specific marketing

policies, market research, etc.

Body: Ministry of MSME, Ministry of Commerce

Other export promotion councils, MSME bodies like FIEO, Cluster

Development Consultancy Services, etc. Regulating Body

Coordinating, Assisting Bodies, Bodies providing inputs

Body: MSME Export

Promotion Council Guidelines, resources,

research support, etc.

Guidelines, resources,

research support, etc.

Policy requirements,

stakeholders, roles &

expected timelines

Inputs to policy in

the form of current

state information

Relevant information

wrt MSME exports

like key countries of

export, key clusters

doing well, etc.

SWIFT+ Integrated Technology Platform for exchange of information across various stakeholders

Ecommerce

Companies Logistic Companies Financial Institutions

Order and product

related information Shipment tracking and

other logistic services

Banks will be able to

provide payment &

refunds tracking

Other Stakeholders:

Integrating other stakeholders

in the journey to offer a

seamless experience to the end

consumer

DC-MSME

(QMS/QTT

Scheme)

RBI

(Foreign exchange

and taxation)

CBEC

MEIS and input tax

credit- GST Tax

Council

Quality guidelines

and their monitoring

Integrated custom

clearances

Online rebates with

self declarations

Go

ve

rnm

en

t R

eg

ula

tors

Risk Management

System

Apply analytics to

generate risk score

and level of

examination reqd.

International

Single Digital

Windows

National Digital

Portals

Information

Sharing System

Statistic

Monitoring

System

Take/ Provide

custom info

from other

countries

Access relevant

digital portal

information such

as India post

Authorisation &

access to data.

Published public

information

Utilising &

enabling

statistics such

as sales pattern

Information Systems:

Systems to integrate

and use information for

purposes such as Risk

Management, Sales

Patterns, etc.

NextGen

Warehousing/

Logistic System

Financial

Service System

Ecommerce

Credit System

Smart tracking & live

location

Consolidated financial

information such as

MSME’s credit scores

System integrating

payment gateways &

credit assessments

Sp

ec

ial S

erv

ice

s

SWIFT+

Current SWIFT

Country-wise

exchange rates &

regulations

System Development & Integration (INR) Total Cost

(INR)

1,53,00,000

Maintenance (INR)

1,24,20,000 28,80,000

Financials

• Awareness

• MSME Export Policies

• Process of ecommerce selling

• Benefits of B2C ecommerce

exports

• Mitigating Behavioural challenges

• Assistance

• Regulatory approvals and on-

demand modules

• Creation of own e-commerce

website through FIEO

GlobalLinker

• Continued support through ready

helpline to clarify about processes and

policies

• Consultancy services and referral to

Project Vihaan

• Training

• Online training modules

available through FIEO

GlobalLinker

• Quality standards

• E-commerce website-specific

information

• Packaging guidelines and best

practices

• Testing

• Test on the improvement of

MSMEs and their progress

Project Disha (Training & Guidance Initiative)

Stage 1: Onboarding Stage 2: Sustainability Stage 3: Support

EDUCATING MSMEs The Idea – Project DISHA

MSME Export Promotion Council through offices of the District Commissioner/Magistrate

National Skill Development Council, Cluster Development Consulting Organizations, Local government, Export Promotion Councils like FIEO

Curriculum development, MSME needs identification

Third party consulting firms, FIEO Global Linker, On-boarding agents (local government)

Regulating Body Inputs from On-ground implementing agency

Needs

identification

Hiring on-

boarding agents

Training of on-

boarding agents Marketing

2,00,00,000 30,00,000 10,00,000 2,81,60,000

Total Cost

(INR)

7,21,60,000

MSME Export Promotion Council Ministry of MSME

Financials

MSME Training

2,00,00,000

MARKETING MSMEs The need for a revamped strategy

Cluster Approach: Case Study of Gujarat

• Total Clusters – 83

• Identified important clusters – 26

• Each cluster is dealt with separately to

understand its infrastructural requirements,

export potential, need for technology upgradation,

etc.

• Bodies which have expertise in that category are

managing the cluster. For example, NIFT is

managing jewellery and garments clusters in

Ahmedabad

Example of how key importing countries differ as per the

commodities

Relevant existing policies

Although there are policies present to market MSMEs,

there are several issues which persist

Regulating Body Policy/Schemes Area of Coverage

Ministry of MSME

Marketing Assistance and

Export Promotion Scheme

Participation in international trade fairs, packaging training, market development assistance

(MDA Scheme) for international exhibitions, national award for quality products

Cluster Development

Programme

Cluster level identification and solution of infrastructural and behavioural issues (technology,

skills, quality, market access, etc.), provision of marketing studies on importing countries

QMS/QTT Scheme Training on quality standards

Push instead of

pull strategy

No sector-specific focus

on export efforts More need for cluster-level

marketing knowledge

Persistent customer issues like lack

of credibility of products and process

“Government’s marketing initiatives are largely disconnected, with no real

connect with the needs of MSMEs and targeted help with respect to what

they should sell and how” – Mr. Rajveer, Apex Cluster Development Ltd.

MARKETING MSMEs The Idea – Project VIHAAN

Project Vihaan (MSME Export Marketing Initiative) will have a three-pronged focus

Brand-building assistance

• Assisting MSMEs in International Trade

Fairs and Expos

• National Awards for Quality Products

• Targeted marketing initiatives for

specific categories of Indian exports in

specific countries

• Development of G-Assurance - a rating

of quality for any MSME’s products – to

be displayed on ecommerce websites

(based on SWIFT+ data)

• Graded Marketing Assistance Program

– As per the G-Assurance score, each

MSME to get customized help as per the

requirement

• Cluster-specific marketing

interventions to solve specific

issues. For example, a

particular cluster might need

greater assistance in

maintaining quality because it

deals with defence tools

• Cluster studies to understand

requirements and issues being

faced by different clusters

• Training programs on

building brands by focusing

on packaging, promotion,

etc. for MSMEs which have

gained some experience

in selling over e-commerce

• Best practices of good

exporter brands from across

the globe

• Knowledge about

certification to build

credibility of brands

MSME Export Promotion Council Ministry of MSME

MSME Export Promotion Council (DC-

MSME CDP) through offices of the District

Commissioner/Magistrate

MSME Export Promotion Council

(DC-MSME CDP) through offices

of the District Commissioner

DGFT, Min of Commerce Cluster Dev. Consulting Firms Consulting & Training partners

Provide country-wise exports info Cluster-specific requirements Requirements of MSMEs

Cluster Initiatives Marketing Initiatives

Requirements for

in-depth study

and analysis of

key clusters

Cluster-specific

info about focus

countries for

better targeted

marketing

List of identified

MSMEs in

specific clusters

which are

comfortable with

B2C ecommerce

Specific issues

being faced by

MSMEs

MSME Export Council (DC-

MSME CDP) through offices of

the District Commissioner

Cluster Dev Consulting Firms, Local

government functionaries Cluster Dev Consulting Firms,

Local government functionaries

Cluster Dev Consulting Firms,

Local government functionaries

Regulating Body Inputs from On-ground implementing agency

Cluster Studies Tailored

marketing G-Assurance Brand Assistance

5,00,00,000 12,50,00,000 36,00,000 Outsourced ad-hoc

as per need

Total Cost (INR)

17,86,00,000

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7

IMPLEMENTATION PLAN & GROWTH PROJECTION

KPI’s

MSME needs identification

Trainers

identification

& tie-ups

Ads for

Project

DISHA

On-boarding of

MSME’s by the

agents

Training class,

On-boarding (if

required)

Free assistance for the first few months

Reasonable charges afterwards

Hiring and Training of the on-boarding agents

• No of MSMEs trained

• MSME’s on-boarded

• % increase in sales to

global exports from

the region.

DIS

HA

Identifying and on-boarding

stakeholders other than Sellers & GOI

On-boarding of

International

Single Window &

National Portals

Start the

information

sharing systems

statistics services

Implementing

special services

like Financial

Services

• % change in the turn-

around time

• Successful onboarding

of stakeholders SW

IFT

+

Identify &

on-board

partners for

Cluster

Study

Conduct

Cluster

Study

+

DGFT Data

Priority

Sector &

Cluster

Identification

and needs

Tailored

Marketing

Initiatives

Developing

G-

Assurance

based on

SWIFT data

Classify

MSME’s as

per G-

Assurance

Brand

building

assistance

to MSME’s

• % increase in sales

for MSME’s

• Inc. in value of total

export for MSMS’s

• Critical clusters

identified

VIH

AA

N

PR

OJE

CT

SA

MA

NV

AY

Overall

SAMANVAY

KPI’s

• No. of MSMEs brought onto Global Ecommerce in a period • Improvement in the Import export global rating of India

• The % change in lead time, in various phases of the journey • Increase in % number of MSMEs exporting B2C over e-comm.

S No Description Current

value Year 1 Year 2 Year 3 Year 4 Year 5

1 Annual Exports by top 20 commodities for FY18 15,28,59,00

5

2 Average share of MSME in India's exports 40%

3 Annual MSME exports (top 20 comm) in FY18 6,11,43,602 6,72,57,962 7,73,46,656 8,89,48,655 10,22,90,953 11,45,65,867

Assuming annual growth rates Y-o-Y 10% 15% 15% 15% 12%

Gro

wth

CAGR of

13.38 %

Q & A

APPENDIX Primary Points of Contact

Mr. Nikunj Srivastava,

Addl.. Commissioner,

DGFT

Mr. Shantanu Mitra, Add.

Development Commissioner,

Ministry of MSME

Mr. Rajveer Singh, MD,

Apex Cluster Development

Services

Prof. Rangarajan,

Head, Centre of MSME

Studies, IIFT

Mr. Sharique

Abid Sharique Enterprises

Mr. Atul

Usha Apparel Ms. Sadaf

Aqsa Creations

Mr. Manoj Jain

Net Care Infotech Mr. Deepak Chauhan

Cohesive Technologies

APPENDIX Financials and Secondary Sources

1 SWIFT + 1,53,00,000

(a) System Development &

Integration

1,24,20,000

1 - Other Stakeholders

40,80,000

Assuming we need a team of 3-4 Software developers, 1 Tester and 1 Architect with an

average monthly salary of Rs. 50000, 40000 & 100000 respectively. First 6-8 months for

developing the system capabilities for sharing access to non-government players and on-

boarding e-commerce companies, next 1-2 months each for integrating with Logistic

companies and Financial Institutions

2 - Information Systems

30,60,000

First 5-6 months for developing the system capabilities for sharing access and integrating

with foreign governments portals, next 1 months each for National portals, 1 month for

Information Sharing System and 1 month for Integrating Statistic Monitoring System.

Assuming we need a team of 4 Software developers, 1 Tester and 1 Architect with an

average monthly salary of Rs. 50000, 40000 & 100000 respectively.

3 - Special Services Systems

52,80,000

3-4 months for developing and integrating each of the E-commerce credit, NextGen

Warehousing and Fianncial Service System. Assuming we need a team of 5-6 Software

developers, 1 Tester and 1 Architect with an average monthly salary of Rs. 50000, 40000 &

100000 respectively.

(b)

Maintenance

(This will be incurred from next

year)

28,80,000 Assuming we need 2 people for regular updating and maintaining the system. Assuming an

average monthly salary of 40000

Cost Workings

Cost Workings

2 Project DISHA 7,21,60,000

(a) Needs identification

2,00,00,000 Assuming that it will be outsourced to a Third Party and assuming an approximate cost of

1000000 per district and we initially moving with 20 districts

(b) Hiring on-boarding agents

30,00,000 Assuming we have 5 on-boarding agents per district and an average monthly salary of

30000

(c) Training of on-boarding agents

10,00,000 Assuming an average cost of 10000 per agent

(d) Marketing

2,81,60,000

Ad Development

20,00,000 Assuming an Ad development cost of Rs 2000000

TV ads

69,60,000

Assuming we are advertising in 2 channels (one general entertainment and one news

channel), Ad time of 20 sec, Ad is run 10 times in a day and for 1 month

https://www.themediaant.com/television/abp-news-advertising

Radio Ads

72,00,000

Assuming we are advertising in 20 channels (one channel per city), Ad time of 20 sec, Ad

is run 10 times in a day and for 1 month

https://www.themediaant.com/radio?stations=Radio%20Mirchi

Newspaper Ads

1,20,00,000

Assuming an print size of 30 cm X 25 cm and an average print rate 800 per sqcm

https://timesofindia.releasemyad.com/tariff/Times-of-India-Display-Advertisement

(e) MSME training cost

2,00,00,000 Assuming an average cost of 10000 per MSME and we are training 100 MSME per district

per year

(f) Assistance during initial

months -

No additional cost, to be done by on-boarding agents

APPENDIX Financials and Secondary Sources

APPENDIX Financials and Secondary Sources

Cost Workings

3 Project VIHAAN 17,86,00,000

(a) Cluster Studies

5,00,00,000 Assuming that it will be outsourced to a Third Party and assuming an approximate cost of

50000000 for priority cluster and needs identification

(b) Tailored Marketing Initiatives

12,50,00,000

E-commerce websites

integration -

Partnering with E-commerce websites to promote specific products in certain geographies

Expos

12,50,00,000 Assuming the cost of subsidising one exporter for a trade fair is approx. 250000 and we are

subsidising 500 exporters going for trade fair in a year

(c) G-Assurance Rating System

36,00,000

Assuming 4 months for develpoping and 2 months for testing and improvement. Assuming

we are hiring 3-4 analysts and a manager to develop the rating system with an average

monthly salary of 100000 and 200000 respectively

(d) Brand Assistance Team - This will be outsourced on adhoc basis as per need

0

2,00,00,000

4,00,00,000

6,00,00,000

8,00,00,000

10,00,00,000

12,00,00,000

14,00,00,000

Current value

Year 1 Year 2 Year 3 Year 4 Year 5

Growth of Exports by MSME's

Growth in MSME Exports

APPENDIX Financials and Secondary Sources

• http://www.dcmsme.gov.in/MSME-DO/export.htm

• https://ic.gujarat.gov.in/cluster-development.aspx

• http://pib.nic.in/newsite/PrintRelease.aspx?relid=168611

• https://cleartax.in/s/table-6a-gstr-1-export-refund

• https://www.icegate.gov.in/SWIFT/about-us.html

• https://www.gov.uk/guidance/e-exporting

• https://www.thehindu.com/business/Industry/policy-drags-ecommerce-exports/article17412925.ece

• http://dgft.gov.in/sites/default/files/bjune18_0.pdfhttp://docs.iift.ac.in/cbt/msme_new/DOCS/A-

3/Institutional%20Support%20for%20SMES%20(Centre%20Level).pdf

• https://www.investindia.gov.in/team-india-blogs/next-step-trade-cross-border-e-commerce

• https://www.statista.com/statistics/348309/india-barriers-for-cross-border-shopping/

• https://dgft.gov.in/sites/default/files/imc-EXPORT-sme.pdf

• https://www.statista.com/statistics/274251/retail-site-penetration-across-markets/

• https://www.statista.com/statistics/348108/cross-border-e-commerce-usage-worldwide/

• https://www.unido.org/sites/default/files/2017-10/WP_17_2017.pdf

• http://www.chinadaily.com.cn/a/201802/09/WS5a7d5aa0a3106e7dcc13bd58.html

• https://www.ystats.com/wp-content/uploads/2015/03/Brochure_Global-Cross-Border-B2C-E-Commerce-2014.pdf

• https://www.prnewswire.com/news-releases/global-cross-border-b2c-e-commerce-2015-300140005.html

• https://www.unido.org/api/opentext/documents/download/9919169/unido-file-9919169CBT -

• https://www.statista.com/statistics/892740/india-cross-border-online-retail-by-trade-destinations-by-country/

• http://dgft.gov.in/bulletin-statis-report