Alibaba, Sidbi to take SMEs global

Alibaba, the world’s most valued e-commerce platform, is in advanced talks with Small Industries Development Bank of India (Sidbi) to help micro, small and medium enterprises (MSMEs) get a global market place. Alibaba, which listed on the US stock exchange last year and is expanding aggressively outside China, will ensure that digital plays a transformative role in India much as it has done in other parts of the world.

K Shivaji, chairman and managing director, Sidbi, told dna, “Discussions are on with Alibaba and there are a couple of options before us. We are deliberating so that MSMEs can have a global market place. Even last week we had discussions with them.” Finding avenues to sell their products in a fiercely competitive global marketplace has been one of the toughest tasks for SMEs in India. E-commerce will help them compete with their bigger peers through a more efficient distribution system, experts said.

Sidbi, the principal financial institution for promotion, financing and development of the MSME sector, already has a tie-up with Snapdeal, one of the country’s largest online marketplaces. The memorandum of understanding with Snapdeal will help Sidbi join the e-commerce company’s Capital Assist initiative, which was launched last year. This offers Snapdeal sellers customised financing options based on their business category and requirements. Banks have been lending to MSMEs while calibrating the corporate credit growth. As of June 30, 2015, the total outstanding credit to the sector was Rs 3.74 lakh crore, about 4.8% higher than the year before. Total bank credit during this period was Rs 61.75 lakh crore, according to the Reserve Bank of India data.

Sidbi also has a scheme called Mudra credit, where loans up to Rs 10 lakh are given to entrepreneurs without a collateral. But finding a market place is something that the sector has been struggling, and the tie-up and promotions with e-commerce partners like Alibaba are expected to open up new revenue stream for the MSMEs.

“Bankers and financial institutions have called for a refinance package for MSMEs, which contribute 17% to the GDP and form 50% of the employment. Out of the four crore MSMEs in India, about 10% close down every year for want of bank loans, unwillingness of the promoters to invest in latest technology and inability to respond to the needs of the market. E-commerce platform is sometimes the only answer for SMEs, which find it difficult to get the right price for their produce,” a senior banker said.