India Urged to Embrace Principal Place of Business Model for Online MSMEs: BCC&I

1st July 2024: E-commerce has significantly enhanced MSME capabilities by offering global market access, reducing operational costs, and providing efficient tools for inventory management and payment processing. While e-commerce platforms have enabled MSMEs streamline their logistics and use digital marketing to enhance visibility and sales certain GST registration requirements have proved a limiter their growth and economic contributions. The Bengal Chamber of Commerce and Industry (BCC&I) hosted a session, titled ‘Seamless E-Commerce Platform Operation for Sellers and Compliance,’ where experts deliberated on the challenges faced by MSMEs in the e-commerce sector under the current GST regime and deliberated possibilities to enhance ease of doing business.

Sellers highlighted that many MSMEs find the registration procedure rigorous as it varies from state to state, with numerous applications being denied for reasons that at times appear unclear. They also highlighted that the current Principal Place of Business (PPOB) registration regulations, which mandates a brick and mortar set up to accommodate business operations, compulsory employee presence, specification on space dimension impose financial and operational burdens on MSMEs in an increasingly digital-oriented business environment. Sellers are also facing issues with biometric requirements, since they need to be physically present for verification, complicating remote or digital business operations. While appreciating contributions of the state government of West Bengal towards MSME’s platformed on e-commerce, the sellers urged support from the State of West Bengal in inclining the need of one home state PPOB registration with other States to provision Ease of Business based on their optimism of the state of west Bengal

During the session, experts praised the State of West Bengal government for embracing shared space model in respect of registration while exercising due caution. However, they emphasized the urgent need for broader acceptance and swift integration of the PPOB model for MSMEs. This model simplifies regulatory compliance, reduces administrative burdens, and streamlines operations for MSMEs in shared e-commerce spaces. Secondly, the PPOB model promotes resource sharing among MSMEs, enabling them to pool logistics, warehousing, and other essential services. Thirdly, by easing entry barriers and fostering a more supportive environment for MSMEs, the PPOB model can stimulate entrepreneurship and innovation. They also recommended that the government introduce digital invoicing to simplify GST compliance for MSMEs, helping reduce paperwork and errors, and enhance efficiency. They also called for clearer guidelines tailored to the unique nature of co-working spaces to address classification and taxation issues. Collaboration between retailers and tax authorities was highlighted as crucial for addressing concerns and establishing mutually agreeable solutions.

Sri Devi Prasad Karnam, Commissioner, State Tax, West Bengal, said “We have adopted a pragmatic approach to business registration that aligns with the realities of modern e-commerce. Our policy understands shared space and coupled with exercising due caution we endeavour to foster a more conducive environment for MSMEs and small sellers. We hope to see ease in compliance and more acceptance for MSMEs in the times to come across states. By doing so, we can collectively support our MSME sector, drive economic growth, and create a more competitive and inclusive business landscape across India.”

Speaking on this, Sri Debashis Bandyopadhyay, IAS, Special Secretary, Department of MSME & Textiles, Government of West Bengal said, “West Bengal stands at the forefront of India’s MSME landscape, hosting nearly 89 lakh units across manufacturing, trading, and other sectors. The state boasts over 29 lakh MSME entrepreneurs, constituting 32.7% of the nation’s MSME enterprises and providing employment to 1.36 crore individuals, prominently in manufacturing. The state government has catalyzed growth with initiatives like the expansion of the textile sector, easing monitored yet safe entrance norms to the State which showcases the state’s commitment towards supporting local industries and fostering MSME growth through strategic policies.”

Leave a Reply

Your email address will not be published. Required fields are marked *