Technology gaps in SMEs' cross-border trade

More than 30% of India's GDP comes from exports and imports of goods (excluding services).

SMEs account for over 40% of this amount, or about USD 300 billion per year.

This trade is mostly with developed countries (the US, EU, Japan, China, etc.).

More than 30 million people in India are directly employed by small and medium-sized enterprises (SMEs) that engage in cross-border trade.


Exports are particularly attractive to SMEs because –

Margin expansion - Higher profitability due to lower labor costs and raw materials availability

There must be a better track record of overseas buyers in terms of payment, as well as easier access to credit insurance.

Buyers from developed countries are far more disciplined when it comes to payment.

3% to 5% GST benefit plus incentives

Benefits due to INR depreciation

Interest subvention on borrowings, Capital subsidies, Advance Authorisation (Import Duty waiver)

India receives over 14 million shipments (by sea and air) every year.

SME shipments have little digital footprint or data consolidation associated with them.


The current process is laborious, paper-intensive, and unorganized.

Each shipment takes about 60-75 days from start to finish.


EXIM in India is a complicated process.


For every shipment, an SME has to coordinate with 10+ service providers in addition to overseas customers and suppliers.

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 for this shipment (excluding manufacturing and manpower costs) is approximately USD 4,000.

Additionally, the collective time spent on each shipment is at least 100 man-hours.

It is also necessary to catch up on government regulations, both local and international.


Surprisingly little or only piecemeal technology support is available for these webs of activities.


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).


The result is, however, 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.

Unfortunately, SME exporters and importers do not have access to tools or solutions that simplify their lives.

Import
Most custom ERPs used by SMEs are focused on accounting, inventory, HR, etc., not on the export/import workflow and digitization.


In larger companies, SAP extensions are deployed to their ERP solutions.

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.

A cloud-based or off-the-shelf tool can't digitize the export/import workflow of an SME exporter/importer.

As a result, 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.


The reason many SMEs find it difficult to manage and/or expand their EXIM business is because of this.

Is there a better way of dealing with this?


Supply Ninjas’ team has used this opportunity to automate, digitize, and simplify the lives of SME exporters and importers through all in one platform Ninjas Pro.


Learn more about Ninjas Pro by clicking here


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