Exclusive| Govt's first foray into e-retail through 'Bharat Craft' portal shelved for now

Representative Image. A worker dries thread for weaving handlooms at a textile mill in Agartala, Tripura. Handicrafts and textiles, made by rural or tribal businesses were major items targeted by the Bharat Craft portal. (REUTERS/Jayanta Dey)

The Bharat Craft portal planned by the micro, small and medium enterprises (MSME) ministry early in the second term of the Modi government to help small businesses, especially in rural and tribal communities, sell their goods online has been shelved, for now, sources in the know told Moneycontrol.

After working on it for a year, the government in March 2021 decided to outsource the development and operation of the portal to the private sector. But due to a lack of interest from private players, the project has been put on hold, multiple senior ministry officials have confirmed.

The portal was first announced by the MSME ministry under Nitin Gadkari in August 2019 after receiving the go-ahead from the Prime Minister’s Office. It was proposed to be based on the model of the Government e-Marketplace (GeM), the Centre’s public procurement portal.

However, unlike GeM, which is accessible only to government buyers, Bharat Craft was planned to be open to all private consumers and was billed as the first foray by the government into the e-retail space.

The project was initially estimated to generate Rs 10 trillion in revenue over two to three years. But subsequent studies found that figure to be overly optimistic and that the real figures may be substantially lower, a senior official said. “Work on creating the digital architecture had begun in earnest but the project saw enthusiasm tapering off soon after. The lower estimates also dampened interest in the entire initiative,” he stressed.

“While the primary mandate had been to create an e-marketplace for showcasing products by tribal, rural, and small businesses, market surveys showed buyer interest may remain muted for such products. That’s because online consumer activity remains primarily focused on brands and bargain hunting, key attributes that products on this platform may not have,” he said.

To counter this, major publicity would need to be undertaken for the portal and the government would need to perform major hand-holding for sellers on the site to build their business, he said.

Back and forth

The background work to create a suitable digital architecture of a website also remained incomplete as the ministry faced a challenge in shortlisting technology partners. After plans to opt for a private tech developer faced cost constraints, the ministry had approached the State Bank of India (SBI) to jointly design and run the portal.

Subsequently, SBI announced that it would take care of the banking side of operations. The bank also clarified its intentions to invest $100-150 million, but it placed some of its own conditions.

It wanted the portal to be positioned as a business-to-business (B2B) e-commerce marketplace rather than a business-to-consumer model suggested by the ministry. To be overseen by SBI, the marketplace would have seen SBI customers exclusively selling their products.

Lack of interest

The Bharat Craft portal has also suffered due to the popularity of the larger and better known GeM portal. Officials said that there had been a longstanding proposal to merge the portal with GeM. But this proved unworkable due to the particular nature of the code on which GeM is built.

The confusion over the portal’s future kept private software developers and website operators away. “Many felt it was unfeasible to take up the charge of a portal such as Bharat Craft. Because back then, there were reports that the GeM portal itself would soon allow private entities to place bulk purchases. It was subsequently set to broaden this to small-ticket buying,” a person in the know said.

A Cabinet note to this effect was also floated in late November 2019. But the commerce department, which runs GeM, ultimately decided against the proposal as well.

The MSME sector’s share in the country’s GDP stands at 29 percent and it has created employment for around 11 crore people. The government is currently looking to increase the share in GDP to 50 percent and generate employment for 15 crore people in the coming five years, officials said. As a result, the portal may yet see official interest later, they added.