Drip Capital, a US-based fintech company, has signed a memorandum of understanding (MoU) with the Buying Agents Association (BAA), a non-profit organization representing Buying Agents/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.
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 – 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 would 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,” said Mr. Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital.
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.
However, trade-related challenges cannot be tackled by private companies alone. BAA is a central body that brings together Buying Agents, the exporting community, and customers on a common platform. “As an association, BAA is committed to spreading awareness and disseminating usable insights into the export fraternity in India. Despite rapid growth seen in recent times, the export industry in India is highly unorganized & is marred by an acute knowledge gap, which adversely impacts the productivity & margins of the exporters,” said Mr. Manoj Rana, Governing Body Member, BAA.
Ms. Anchal Kansal, General Secretary, BAA, added, “As an organization, BAA endeavours to take prudent steps towards bridging the existing knowledge gap and encouraging best practices in the industry. In this regard, the Knowledge Sessions with Drip Capital on collateral-free export finance are a collaborative step that will help exporters learn how they can increase their revenue and cash flow along with mitigating risk by availing a ‘factoring agency’.”
Under the provisions of the memorandum, BAA, in partnership with Drip Capital, will conduct a series of awareness-raising events with the export community across the country. The memorandum was signed by Ms Anchal Kansal, General Secretary, BAA and Mr Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital.
Drip Capital has financed over $500 million of the international trade originating from India so far, helping exporters in 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.