There are over USD 800 billion in exports and imports of goods in India every year (excluding services), which accounts for more than 30% of the country's GDP.
Over 40% of this amount is accounted for by SMEs, or about USD 300 billion per year.
This trade is mostly with developed countries (the US, EU, Japan, China, etc.).
The cross-border trade sector directly employs over 30 million people in India.
Exports are particularly attractive to SMEs because –
Due to low labor costs and access to raw materials, high margins - Competitiveness
One of the key aspects is a better track record of payment from overseas buyers, as well as easier access to credit insurance.
In developed countries, buyers are much more disciplined when it comes to payment.
Benefits from GST plus incentives (3% to 5%)
Benefits of depreciation of the INR
Borrowing interest subventions, Capital subsidies, and import duty waivers (advance authorisation)
More than 14 million shipments cross India every year (by air and sea).
SME shipments have little digital footprint or data consolidation associated with them.
Today, this is handled by laborious, paper-intensive, unorganized processes.
Each shipment takes about 60-75 days from start to finish.
India's EXIM process is quite complicated.
In addition to coordinating with overseas customers and suppliers, an SME has to deal with 10+ service providers for every shipment.
Approximately 10-12% of every shipment/invoice is spent on these ancillary activities.
A total of USD 35 billion is spent by Indian SMEs annually on ancillary services from various service providers.
Here is an example of these costs for an FCL shipment.
The total overhead (excluding manufacturing and manpower costs) for this shipment is approximately USD 4,000.
Keeping up with local and international government regulations is also necessary.
Additionally, local as well as international government regulations must be complied with.
For these webs of activities, technology support is surprisingly limited or piecemeal.
Interestingly, India is not an exception and SMEs around the world suffer from the same inefficiencies.
In India, some digitization has occurred on the government side (DGFT, ICEGATE).
Nonetheless, the results are far from ideal.
In the past few years, B2B start-ups and SaaS companies have addressed many of the generic needs of small and medium businesses, such as GST, Accounting, e-Payments, and CRM.
It is unfortunate that there are no tools or solutions that simplify the lives of SMEs exporting and importing.
Most custom ERPs used by SMEs are focused on accounting, inventory, HR, etc., not on the export/import workflow and digitization.
The ERP solution is extended by SAP extensions in larger companies.
As such, these solutions take months/years to install & stabilize, and such solutions are completely out of reach for SMEs due to the cost, time, effort, and uncertainty involved.
SME exporters/importers cannot digitize their export/import here workflow with an off-the-shelf / cloud-based tool.
Due to this, teams from companies handling Export / Import rely on locally stored documents, cabinets full of hard copies, spreadsheet trackers, and proverbial emails without any system support or automation.
It is for this reason that many SMEs struggle to manage and/or expand their EXIM business effectively.
Is there a better way to handle this?
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