About half of MSME units are in rural areas, the report, called Karnataka Innovation Vision 2030, notes. These smaller units, it says, need exposure to bigger markets as well as expertise to achieve economies of scale. Ecommerce can provide a platform to these units to make the shift, it says.
The report, prepared by the Institute for Competitiveness and Primus Partners, a consultancy, has suggested that Karnataka look at Uttar Pradesh’s “One District One Product Cell” market development assistance scheme. The scheme allows MSMEs to offset the costs of cataloguing and photography required to put up their products on at least one major ecommerce portal.
The state government could work with ecommerce players to educate the MSME units. The government could also work with telecom service providers and get them to offer their services to the MSME sector at lower costs. This will help smaller units to get into the ecommerce business.
The report suggests that the government facilitate interactions between MSMEs and ecommerce players so that smaller units get a digital footprint and eventually expand into global markets.
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The report identifies Gadag, Thirthahalli, Shahapur, Somwarpet and Huvinahadagali emerging as smaller hubs for ecommerce activity. Mysuru, Mangalore, Bantval and Udupi are already the major ecommerce hubs, away from Bengaluru.
The government, according to the report, could offer sops for setting up warehouses in some of these newer locations with high demand for regional products. It calls for digital literacy efforts in rural areas to make people comfortable with ordering as well as paying online. Authorities can rope in digital payment firms to educate store owners and their customers on handling digital payment.
The report strongly recommends ecommerce websites in the regional language to help people in rural Karnataka make a faster switch to ecommerce. The government, it says, can incentivise ecommerce firms to provide vernacular options so that store owners can independently onboard on ecommerce sites as sellers without much support.
Logistics service providers have not been active in rural areas due to infrastructure challenges as well as high delivery costs. The government, the report suggests, could work with India Post, and look at getting its network on lease to logistics operators to serve rural areas better.