Modi Government Plans To Assist Small Retailers To Digitise Operations

The government is planning to assist small retailers—a core voter base of the ruling Bharatiya Janta Party—by offering them subsidies to digitise operations and become part of the organised retail space, according to a top government official.

The government is also considering a framework to finance card swiping machines or point of sale systems for small retailers to scale up digital penetration, the official said on condition of anonymity. The subsidy may also be extended for buying of book keeping and accounting software used by traders, he said.

This would help them in doing business with many e-commerce players who are seeking to sign up with such retailers, the official said.

Digitisation, and shifting to e-commerce platforms has boosted sales of small businesses by allowing them to access more customers, according to a report by the Confederation of Indian Industry. The findings of the report showed that 46 percent of small businesses witnessed “significant growth” by adopting by adopting an online sales channel.

According to Praveen Khandelwal, secretary general of the Confederation of All India Traders, out of seven crore traders in India, only 7-10 percent have adopted digital mode of payment,

Traders are hesitant to adopt card swiping machines as banks charge both customers and traders about 1-2 percent, when traders have a thin margin of 3-5 percent, Khandelwal said. Instead of providing support for POS machines, banks should promote Bharat QR—a mobile payment system that allows a merchant to receive digital payments without the POS device—which does not involve any costs, he said.

Digitisation To Help Grow

Small businesses that use digital platforms have doubled their revenue and gained a better market access, according to a report by the Confederation of Indian Industry. About 51 percent of small businesses increased their reach to different cities as compared with offline businesses, it said.

According to a Deloitte report, adopting systems to digitise payments is helping small and medium enterprises extract value for their business.

The committee set up by the Reserve Bank of India to deepen digital payments had suggested incentivising merchants to accept at least one mode of digital payment. This comes when India is forecast to witness the fastest growth in digital payments transaction value between 2019 and 2023, according to KPMG.

National Welfare Board To Decide

The plan is part of a proposal that will be put before the National Welfare Board that intends to identify and suggest measures for welfare of traders. The board has representation from the government and trade associations.

These proposals will be discussed at the board’s first meeting, the official quoted earlier said.

The government is also considering accident and medical insurance for traders, a promise that also features in the BJP’s 2019 election manifesto.

The Department for Promotion of Industry and Internal Trade has had discussions with 20 states on benefits ranging from insurance to skilling that should be provided to traders, the official said.

The BJP’s manifesto promised an accident insurance of Rs 10 lakh to all GST-registered traders, and to create a scheme to give Merchant Credit Cards to registered merchants on similar lines of a Kisan Credit Card for farmers. A Kisan Credit Card allows farmers to avail quick loans at affordable rates.

Khandelwal said the government should ensure a nominal rate of premium for insurance that traders will be able to afford.