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INDIA ADDA – Perspectives On India

IBEF works with a network of stakeholders - domestic and international - to promote Brand India.

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Authors

Colin Shah
Colin Shah
Shri P.R. Aqeel Ahmed
Shri P.R. Aqeel Ahmed
Dr. Vidya Yeravdekar
Dr. Vidya Yeravdekar
Alok Kirloskar
Alok Kirloskar
Pragati Khare
Pragati Khare
Devang Mody
Devang Mody
Vinay Kalantri
Vinay Kalantri
Varun Aggarwal
Varun Aggarwal
Erich Nesselhauf
Erich Nesselhauf
Ghanshyam Lal Vyas
Ghanshyam Lal Vyas
Mr Siddhartha Sacheti
Mr Siddhartha Sacheti
Satish Kannan
Satish Kannan

B2B Ecommerce and Capacity Utilization Critical to the Success of Make in India

B2B Ecommerce and Capacity Utilization Critical to the Success of Make in India

When Prime Minister Narendra Modi launched the Make in India initiative in 2014, the goal was to make India a global manufacturing hub, by providing encouragement to both multinational as well as domestic companies to manufacture their products in India. This campaign has been a big push towards attracting organisations from all over the world to invest in the Indian manufacturing and services sectors. The initiative’s aim of facilitating and creating jobs, boosting the national economy, making India a self-sufficient nation, and ensuring that the Indian economy gets international acknowledgement is commendable.

The Indian e-commerce business ecosystem is presently well-positioned and is growing at a tremendous rate. Such growth and its effects on the market can be of massive help in executing the objectives of Make in India. As companies ramp up the rate of manufacturing, they will need supply chains to work efficiently. These manufacturers, especially small and medium enterprises in Tier-2 and Tier-3 cities, can enlist B2B e-commerce companies for distribution and supply chain network purposes, accessing both domestic and global markets with ease. As foreign direct investment (FDI) is one of the key driving forces behind the Make in India, the B2B e-commerce business is in a privileged position of being completely open, allowing the sector to attract both domestic and foreign funding, helping the inflow of cash in the domestic markets.

Use of B2B e-commerce is also beneficial as it easily minimises risks for the manufacturer in dealing with complex distribution systems, and creates competitive pricing for both the manufacturer and the consumer. In a short period of time, the e-commerce sector has managed to create job opportunities for both skilled and semi-skilled workers, helping bring down unemployment numbers. The scope of employment generation in areas such as customer care (BPOs), IT, warehousing, logistics and transportation, shipping and administration is significant and also accounts for additional contributions to the economy by the e-commerce industry. 

Capacity utilisation—the extent to which an enterprise or a nation uses its installed productive capacity—in the manufacturing sector is a key indicator that not only helps to determine the level of utilisation of existing capacity, but it also helps to define the required level of expansion of capacity for the targeted output. At present, capacity under-utilisation is a major problem in the manufacturing sector. There are numerous Indian companies which are successful and have plants running smoothly, but sometimes their capacities remains under-utilised due to various reasons, such as drop in demand at a particular time, union issues, etc. On the other hand, there are many Indian SMEs who have massive demand for their products in a particular geographical location, but the lack of capacity to fulfil the increasing demands hampers their profit and, eventually, growth. If we can arrange a B2B e-commerce system where both capacity owners and capacity seekers can collaborate to fulfil capacity needs, rate of capacity utilisation can reach optimum levels, giving the Make in India campaign a serious push in the right direction. When international companies look to India as a potential manufacturing hub, they also look at the potential capacity utilisation before kick-starting their business.

If the B2B e-commerce sector can be brought up to speed, it—along with capacity utilisation—can give Make in India an edge the initiative can very much gain from. For example, Shareconomy is a networked platform, developed for improving the utilisation of industrial capacities and enabling industries across sectors to revolutionise the way they have been deriving value from investment.

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