Assessing Value Chain Digitization

This exploratory research study aimed to map and analyse the various value chains that low-income consumers and merchants transact in, to identify strategies for promoting digitisation.

There has been a considerable policy thrust from the Government of India on enabling digital financial inclusion of all population segments. However, the adoption of these financial services and platforms among the poor remains fraught with challenges. Lack of trust in digitised financial services as a result of lack of familiarity and comfort with the various technological platforms forms one of the many obstacles. Phase 1 of this study, which has already been completed, establishes that micro-merchants need both supply-side and consumer side acceptance for a sustainable uptake of digital transactions across the board. Given this context, an important hook for low-income consumers to start transacting digitally would be to ensure that all participants in their local ecosystem, at all points in the various value chains they straddle- comprising of those they economically transact with are equipped to transact digitally.
The study utilized primary data collected in the form of surveys, PRAs/focus group discussions, and social network mapping from two areas – Panipat and Sonipat (Haryana), and Tiruppur (Tamil Nadu). A mixed-methods approach was used to assess the financial needs and challenges faced by rural households with regard to traditional and newly emerging financial services. The study was conducted in three phases, phase 1 having been concluded earlier. Phase 2 consisted of three main components: (a) ecosystem mapping, (b) value chain identification and (c) value chain assessment. Phase 3 comprised of a quantitative survey component, conducted across value chains identified on the basis of cash dependency in both geographies, to build on the qualitative insights.
The mapping exercise comprised of two components:
i. Listing Survey: 4658 factories (1613 in Haryana and 3045 in Tiruppur) were listed to identify the main business activities and major employment hubs across the two districts.
ii. Factory Survey: 246 factories in Sonipat/Panipat and 293 factories in Tiruppur were selected for the survey through a stratified random sample.
In a defined radius of 15 km from the employment hubs mapped earlier, a scoping exercise in the two geographies to identify the key market areas present and value chains present was conducted. As a result, a total of 35 prevalent value chains were identified across both geographies.
The value chains identified in the scoping exercise were examined in detail using inputs from focus group discussions and semi-structured interviews with the enterprises in the value chains shortlisted for the assessment.
Key Findings
Prior research has focused on literacy and awareness campaigns, which have had limited impact in terms of improving awareness, or product take-up. Findings from the study suggest that there is a clear knowledge gap when it comes to identifying the most effective channels and platforms for improving awareness, particularly within a business setting.


Insights from the study contribute to the emerging literature on digital financial inclusion efforts as it attempts to provide a preliminary understanding of the various kinds of interactions that businesses within these value chains in the context of the larger ecosystem. The results from this study will aid in producing actionable ideas and recommendations and inform policy that will guide in filling in this knowledge gap and ease the process of expanding digital financial services to the mass.

Thematic Area

Financial Well-being and Social Protection,

Small, Growing Businesses and Employment

Project Leads

Khushboo Gupta, Vinith Kurian


Haryana, Tiruppur


MasterCard Foundation