EDITION VII

COLLABORATE TO INNOVATE

Team: SHArks

IIM KOZHIKODE

To Understand how Indian MSMEs can build momentum on growth and capture opportunities presented in global

market

Strength Of Indian MSMEs

• Over 63 million MSME

• Employs ~117 million people

• MSMEs manufacture more than 6,000 products

• Contribute to 28.77% to GDP

• 45% of the total manufacturing output

~2% MSMEs actively selling & promoting online

~68% MSMEs are completely offline

~60-80% marketing and distribution cost $2 Bn Market for B2C CBT Ecommerce by 2020

~500 million Internet user in India

4.2 billion Internet user worldwide

80 billion USD is the projected e commerce

market size by 2020

2% of Indian retail spend is Ecommerce spend but

10%-13% are done in other developing nation

Need to Leverage

immense opportunity

globally through CBT

using E commerce

Introduction

• 10 field visits in Thrissur

and Ernakulam

• Telephonic interview of

18 people from

Bangalore MSME belt.

• Study of E commerce

industry ,trade scenarios

across the globe.

Limitations and glitches in e-payments

Low bandwidth and reliability of the network

Poor Information and Communication Technology (ICT)

Inaccessibility to finance

Privacy and security concerns

Complicated Shipping & Export procedure

Risk associated with global market

We are into textile business and face

extreme problem in exporting along with

global competition. P

ain

po

ints

Ashok Dhingra

P& S Textiles

We lack knowledge about foreign market

and technology.It’s costly plus credit

facility is cumbersome .

Pankaj Makharia

TR Motors

Primary& Secondary Research:

Infrastructure

Payments Infrastructure- Fragmented

Ecosystem

• Cross-border interoperable platform and collaboration

• Plans for a pan-ASEAN payments infrastructure for

faster business case process already in ideation stage

• FIEO, PayPal join hands to simplify international trade

for Indian exporters and SMEs

India should think on similar platform covering

major import countries

Country wise cluster-centric approach

Major exports partners with trade surplus

Country % of total trade

(2017-18)

Focus cluster

USA 10.44% Textile

UAE 6.88% Jewelry

UK 2.01% Garments

Netherlands 1.49% Rubber

Italy 1.24% Plastic

The narrow focus shall be more effective

vis a vis an umbrella approach

Helping the one who helps

• Existing startups working with

MSMEs

• Provide financial support under

current themes of Startup India

• Their expertise is instrumental in

improving product quality

Infrastructure

Setting up of Government based infrastructure

• Leveraging Government e- Marketplace (GeM) as a Shopping

website can provide economies of scale.

• GeM 3.0 has a powerful search engine and price comparison

capabilities using third party sites – multisource and real time

• Leveraging the expertise and reach of export promotion

councils and International chambers of commerce to educate

entrepreneurs.

• Liasoning Skill India and Niryat bandhu scheme to impart

awareness and training requisite for the export business

• ERP implementation mandate for third party logistics vendor

for visibility, accountability and lowering pilferage

GeM

MSME 1

Export Promotion Councils

Chambers of Commerce

MSME 2

Export Awareness-

Niryat Bandu

Skill India – Innovation / E-Hub

• Government can setup Bonded warehouse in the

importing countries

• Strategic partnership with the major warehouse and

logistics houses such as Danish based DSV

• Economies of scale help shall help the MSMEs in getting

a price advantage.

• The ownership remains with the seller until the sale is

made.

MSME 1

MSME 2

Bonded Warehouse Country 1

E commerce buyers in Country

1

E commerce buyers in Country

1

Bonded Warehouse Country 2

E commerce buyers in Country

2

E commerce buyers in Country

2

MSME 3

Logistics

India Germany Japan Netherlands

Logistics Performance Index Rank 2018 44 1 5 6

Export time and distance / Port or airport supply chain

Distance (kilometers) 246km 212km 25km 48km

Lead time (days) 3 days 2 days 2 days 2 days

Export time and distance / Land supply chain

Distance (kilometers) 569km 569km N/A 265km

Lead time (days) 6 days 2 days N/A 1 days

Import time and distance / Port or airport supply chain

Distance (kilometers) 203km 350km 25km 99km

Lead time (days) 3 days 2 days 3 days 1 days

Import time and distance / Land supply chain

Distance (kilometers) 812km 559km N/A 453km

Lead time (days) 8 days 3 days N/A 2 days

Shipments meeting quality criteria (%) 77% 95% 93% 82%

Number of agencies - exports 3 1 3 2

Number of agencies - imports 3 1 2 1

Number of documents - exports 3 1 1 1

Number of documents - imports 3 1 1 1

Clearance time with physical inspection (days) 2 days 1 days 1 days N/A

Physical inspection (%) 19% 2% 1% 2%

Competitive benchmarking with countries having high

Logistics Performance Index

Major inferences from the benchmarking

• Lead time for exports/imports in all the modes of transport supply

chains is more in case of India

• The shipments meeting the required criteria is the lowest

indicating quality issues

• Proportion of physical inspection is large hence creating a

bottleneck in the supply chain

Solutions envisaged

Source: World Bank

Leverage UDAN - Regional Connectivity Scheme in

transporting the goods from the small cities/villages to

nearby hubs, thus reducing lead time. Currently 102

routes have been started until 2 Rounds

Robust implementation of single window customs

clearance for exports so that exporters’ interaction with

government agencies is minimized. The program

promotes the cause of Digital India

Existing scheme of Design Clinics of design

expertise and innovation needs to work to-way in

communicating the international requirements to the

MSMEs and equip them with requisite knowledge and

technical knowhow. NIDs and NIFTs can help in

shaping and fulfilling design needs of startups

Logistics

Mechanism for returned consignment De minimis threshold(DMT) of tariff

E-commerce exports via foreign post offices • Integration of customs with India post to leverage the vast

network spanning 100 countries

• Strategic tie-ups with leading e-commerce logistics providers

in foreign countries to enable competitiveness

International Remittances via India Post

E-commerce

buyer makes a

purchase online

The Payment is

transferred to the escrow

account of post office in

the foreign bank

The post office

where MSME has

account receives the

money

MSME withdraws

money from the

nearest post office

• Current policy framework - risk of double taxation on

return consignments

• Marketplace needs to be created where rejected items

can be sold and liquidated locally

• To minimize the cost of returns marketplace providers

can set up a small returns hub to consolidate returns

before shipping them out in bulk

50% of India’s exports are within Asia

Country De minimis value "no duty/tax collection"

(USD)

Singapore 296

Brunei 295

India 150

Korea 150

Malaysia 128

Indonesia 50

Cambodia 50

Vietnam 40

Thailand 28

Bangladesh 13

China 8

Technology

Global trade is now digital. Small businesses are affected by cumbersome

customs procedures, harmonization of customs procedures will considerably

reduce the number of factors that MSMEs need to take into account while

trading globally

Currently India uses Single window systems for imports and exports and

integrating it to financial service system, logistic partner and Ecommerce will

provide more robustness and streamline the entire process

Hangzhou Cross-border E-commerce Comprehensive Pilot Area

BlockChain

ICT as enabler

Monitoring shipping information

pipeline for end-to-end supply

chain visibility

Paperless trade

with digitalization Blockchain-enabled

traceability network

Artificial Intelligence

GeM, powered by AI in the background

Better search results and suggestions

Inventory management and accurate

predictions of demand

SMAC approach

SOCIAL MOBILE ANALYTICS CLOUD

Marketing Initiatives

for Global Markets

PROCESS

Sponsored post, Video

adverts of benefits, audio

ads

Bidding strategy will be

Cost per view for Ads

Cost per million impression

for posts

The user will be promoted

to a call to action to drive

engagement like “Click

here to know more”

Adverts: Platform used:

YouTube, Instagram,

Facebook, Saavn

Sponsored post: Taboola,

outbrain

Age: 20-50

Occupation:

Working/Student

Targeting type : Broad

Campaign Description

1 Video ads and sponsored post on platforms

2 Influencers to share the product on IGTV , Fblive, Insta-stories

3 Sponsored audio and banners ads on streaming apps like SAAVN

Google search ads will

be created for specific

query typed by the target

audiences

Display ads inside

amazon when a search

query is entered platform

with a buy button

A business platform which

lets you publish your brand

Facebook ,Instagram,

Messenger, Audience

Network, Workplace.

We’ll use the three bold

ones for this purpose. Tell

your brand stories in all

these platforms

Use tools such as text

,videos, slideshows, FB

news, Canvas. You can

also choose your TG and

objective of the ad to

conversion in each

platform

Traditional Media for

MSME’s

Newspaper Online News

“Man ki Baat” Probably the biggest

source of information and

collective success is the

radio series in towns and

cities. Through ads in radio

channels and featuring in

other content on radio will

serve as a key outlet for

telling MSME owners

about e-commerce benefits

for exporters in India

“Kyun Sirf Ek Desh

mein Beche” The government body

should run a series of ads

aimed at small business

owners which explain how

government regulations

have eased, how e-

commerce players have

facilitated global selling

and why you need to look

beyond just the home

market for growing

Why Traditional Media?

The audience and business owners we are looking to target

without marketing blast reside in towns and tier 2 and 3 cities

and still consumer media like television and radio has been for

the past few decades and digital media will have limited impact

LaghUdyog mascot

conveying the

message of energy,

zeal and vigor

LaghUdyog – A name that unites all

A common identity for Indian MSMSE Ecosystem

on the lines of Germany’s Mittlestand

Yearly theme for sectoral focus rather than umbrella

approach

A sense of belongingness amongst MSMEs

Good opportunity to promote Indian MSME

Global Opportunities

Awareness

Common Story

This is the story of most small and

medium enterprises, either they are

unaware about the opportunities

outside of India or do not know how

they will get the business from other

countries and their markets

Karan Bhatia

It is not like we do not know there

is a more lucrative market than

India out there but we have to go

through so many hurdles here

only, who wants to get into

business in a foreign land. I hope

to see my products compete with

Body Shop across the world

Why E-Commerce?

Having only recently accepted e-

commerce as a mode of augmenting

their business locally, most

SME/MSMEs are curious but remain

unaware how it can grant them access

to global markets

The traditional form of media with a series of ads similar

to Mutual Funds Sahi hai scheme for awareness and

trainings/lectures to spread the knowledge among

maximum population

Know

The traders and businessmen have to feel

like the government policies are being

made keeping them in mind. A separate

ministry working on targeted initiatives will

help build trust

The final step in this awareness process is business

owners coming together in formal and informal settings to

tell each other about the success they have enjoyed by

taking advantage of global opportunities.

Trade Expos. Fairs etc. will be one way

Do

Journey Map

IIT Delhi

IIT Madras

IIM Calcutta IIT Bombay

IIM Bangalore

IIT Hyderabad

IIT Kanpur

IIM Ahmedabad

IIT Guwahati IIT Jodhpur

IIT Patna

IIM Kozhikode

IIT Bhubaneswar

IIM Indore

IIM Jammu Incubation Hubs

Startup incubation

centers in Major IITs

and IIMs to provide

business knowledge.

Mentorship and

consultation can be

provided to help scale

the business and adopt

best industry practices

Global Opportunities

Awareness

Feasibility & Sustainability through Scale

SME/MSME’s do not go global because of three main

reasons:

1) Awareness 2)Scale 3) Quality

A platform that will allow smaller businesses to come

together to merge orders, share costs and engage in

quality control simultaneously will be a big step towards

them recognizing opportunities outside domestic

markets.

The government will have to take the first step by

promoting on traditional media while tying up with global

marketplaces to promote businesses that will be

attractive there.

The government will have to set up a panel to overlook

the platform but should allow the autonomy to reside with

the businessmen. They will figure out effective ways to

make the process sustainable by taking in everyone’s

opinion and help take their business truly global.

How?

MSME Yatra

A nationwide targeted yatra

on the lines of Start-Up

Yatra to carry the message

of why MSME’s need to go

global

A breakdown of costs identified ->

THANK YOU

Team SHArks

IIM Kozhikode

QUESTIONS?