US-based fintech company Drip Capital has signed a memorandum of understanding with the Buying Agents Association (BAA), a non-profit organisation representing buying houses and liaison offices from all sectors including accessories, apparel, carpets, handicrafts, jewellery, leather, processed foods, textiles, furnishings and other labour-intensive sectors.
The two organisations will partner to provide stakeholders from India's export ecosystem with training in technology and invoice factoring. The partnership will give small-and-medium-sized exporters exposure to fintech solutions, widely considered to be one of the biggest disruptors in cross-border trade.
Small exporters, who are often overlooked by banks or are otherwise unable to access the traditional banking system, can leverage these solutions to their benefit. The Drip-BAA partnership aims to help exporters and buying agents understand these opportunities better.
Pushkar Mukewar, Co-Founder and Co-CEO of Drip Capital, said the existing paper-based trade finance system is inefficient and biased against smaller exporters. These exporters spend time in battling bureaucracy, slow processing times and demands for collateral -- the time they cannot afford to waste.
"This is what Drip Capital aims to fix with its focus on collateral-free, technology-enabled finance. Our idea is to create an automated platform that will address the working capital needs of SMEs not just in India, but across the world. What we want is to level the playing field for SMEs everywhere and give them easy access to trade finance," he said in a statement.
Helping SME exporters with simplified trade finance also feeds into a larger goal of giving the country's overall economy and GDP growth a boost. Multilateral agencies like the World Bank have found that economies gain immensely when trade increases, especially in the MSME sector.
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Drip Capital has financed over 500 million dollars of the international trade originating from India so far, helping exporters in more than 60 cities across the country ship products to buyers in more than 50 countries around the world.
The partnership with BAA will help Drip reach out to even more SME exporters in need of working capital and help them create economic development and growth across their businesses.Despite rapid growth seen in recent times, the export industry in India is highly unorganised and is marred by an acute knowledge gap, which adversely impacts the productivity and margins of the exporters, said Manoj Rana, member of BAA's governing body.
"As an organisation, BAA endeavours to take prudent steps towards bridging the existing knowledge gap and encouraging best practices in the industry," he said in a statement.
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