FISME demands incentives for online and offline sellers to encourage digital inclusion in India

The Covid-19 pandemic has illustrated the disparate contours of digital readiness across many facets of our society. The steep uptake of digital solutions in the last two years have accentuated the immense digital divide, showcasing just how far behind many are in the digital adoption journey. The importance of mitigating this growing digital divide and empowering the less equipped to cope with structural and behavioural changes cannot be stressed enough.

E-commerce has been one of the biggest enablers of MSMEs in the country – it has helped businesses stay afloat, accelerated their digitization process, created millions of jobs, while providing the convenience and safety of shopping from home. For example, Amazon recently announced that it has cumulatively created more than 11.6 lakh direct and indirect jobs, enabled nearly US$ five billion in cumulative exports, and digitised over 40 lakh MSMEs in the country till date, providing the much required push to the sector. However, limited access to basic digital infrastructure has deprived many – especially women-led and homegrown MSMEs – of what has become essential to everyday life.

The road to digital inclusion opens endless opportunities and is paved with critical milestones such as access to the internet, digital literacy, and inclusivity by design. Anil Bhardwaj, Secretary General, Federation of Indian Micro Small & Medium Enterprises (FISME), said, “We cannot fully unveil the benefits of solutions offered by the digital ecosystem without digital inclusivity measures. There is a greater risk that digital innovations will continue to increase inequality rather than advance equity.  Thus, the issues of opportunity, access, knowledge, and skill in the context of digital must be articulated and addressed.”

FISME, which represents more than 740 MSME associations with an outreach of over 2 million MSMEs, put forth the following recommendations to encourage digital inclusion in India, in line with the Indian government’s programs and policies.

• Support the transition from cash towards digital mechanisms – Work with the private sector to explore and develop opportunities that support digitization of MSME value chains, and raise awareness around the risks of fraud, helping develop mitigation strategies for MSMEs and build confidence in the digital financial system.

• Support the establishment and development of e-commerce models which align with the needs of MSMEs – Improve connectivity beyond urban centers, ensure regulations for e-commerce which specifically recognize the needs of the vulnerable and offer appropriate protections, and develop economy-wide e-commerce strategies to close gaps in digital access, literacy, adoption, and use.
• Drive demand and support the onboarding of micro-merchants onto formal e-commerce platforms – Work with e-commerce market players to promote technology solutions that cater to the poor and enable online business opportunities through technology incubators and accelerators, training, development of start-up tools, and establish pragmatic regulatory requirements to provide suitable pathways to formalize the businesses of micro-entrepreneurs engaged in e-commerce.
• Support women entrepreneurs – Increase opportunities for digital connectivity by prioritizing investments and providing incentives that lead to greater access to smartphones and internet connectivity for women entrepreneurs in rural areas, and provide digital skills training which are tailored to strengthen women’s agency, capabilities, and use of technology in an enterprise context.

Bhardwaj also stated, “There is a need for local governments in rural areas to encourage and facilitate internet connectivity, logistics networks, and a framework for complaints and dispute resolution. Efforts must also be made to offer incentives like a simple GST registration process and lower tax thresholds.”