Exports Digest > Opinion piece

E-commerce exports: Finding its feet – and a place in policy

Authored by Dr. Badri Narayanan Gopalakrishnan, Fellow and Former Head, Trade, Commerce, and Strategic Economic Dialogue, NITI Aayog

In a significant and positive development for the industry, the Foreign Trade Policy 2023, for the first time ever, included a dedicated chapter on e-commerce exports, according formal recognition to the sector. This encouraging step by the Government of India is sure to be catalytic to the sector’s growth. The FTP 2023 incorporates many enabling provisions for the industry to reach a target of $200–300 billion by 2030 and create a conducive ecosystem for Indian exporters.

The new FTP has been well received by the industry, especially as it aims to solve many challenges faced by e-commerce exporters. Prime among them is the inclusion of specific/separate policy provisions for e-commerce exports unlike before when e-commerce exporters needed to force fit offline policies to online exports. These provisions will potentially reduce the disproportionate regulatory burden on such exporters and simplify exports. Here are some of the high-level policy provisions:

• Setting up of dedicated e-commerce export hubs with warehousing facility for easy storage, customs clearance, returns processing, labelling, testing, and repackaging.
• Special outreach, handholding, and capacity-building initiatives to promote e-commerce exports among the exporter community.
• Extension of all FTP benefits to e-commerce exporters.
• Increase in value of exports through the courier mode to INR 10 lakhs (from INR 5 lakhs).

The new FTP has been well received by the industry, especially as it aims to solve many challenges faced by e-commerce exporters.
Dr. Badri Narayanan GopalakrishnanFellow and Former Head, Trade, Commerce, and Strategic Economic Dialogue, NITI Aayog

The Government is also looking to establish a centralized Trade India body with a view to provide a roadmap for the country to achieve this target. This body, which will replace multiple export promotion councils, is mandated to promote export products and markets, identify bottlenecks, and explore trade opportunities in untapped markets. Initiatives such as One District One Product (ODOP), the District as Exports Hub (DEH), and Dak Niryat Kendra will further help promote e-commerce exports at the grassroots level.

The Indian e-commerce exports industry has great potential and unlocking this potential through the FTP’s provisions will be integral to realizing the GOI’s vision of $2 trillion overall exports target by 2030.

Key enablers to boost e-commerce exports

E-commerce exports is still in its nascent stage in India (the industry is less than a decade old) and could do with all possible policy push. The FTP seeks to solve most of the fundamental problems in the sector including lack of awareness and export incentives, need for simplified returns and customs clearance procedures, and the need to increase the value cap of shipments through courier mode. However, a few challenges still remain. To begin with, MSMEs adopting e-commerce exports often face lack of credit availability. Then there is a need to automate processes related to logistics, payments, and compliance to eliminate redundancies. This includes simplifying payment reconciliation regulations and procedures such as removing the 25% cap on downward variation in e-commerce shipments, easing documentation, and reducing/removing the cost burden of shipping bill closure on the Export Data Processing and Monitoring System (EDPMS).

Besides, much can be done to enable awareness and education of exporters through training programs, accelerators, etc. This will help Indian MSMEs and D2C brands adopt cross-border e-commerce to build their brands and succeed in international markets. A report by the Global Trade Research Institute (GTRI) mentions a list of 21 action points, including redefining the role of exporters, developing market intelligence, and improving branding to simplify and enable e-commerce exporters in India.

Ecosystem needs to come together

The government has set the ball rolling with the new FTP to increase ease of doing business through e-commerce exports. Now, the ecosystem — comprising the government, regulators (RBI, the Central Board of Indirect Taxes and Customs, etc.), industry associations (the FIEO, etc.), logistics and payments providers, banks, VCs, incubators, e-commerce programs like Amazon Global Selling, and more — needs to come together to further deliberate and execute on policy provisions with a view to simplify and amplify adoption among Indian businesses. They can do this through collaborations, sharing of insights and data, increasing working capital flow to exporters, training and awareness programs, product interventions, policy submissions, formation of joint committees with the DGFT, and more.

A recent report by IKDHVAJ, an emerging trade advisory body, stresses the need for a digital single-window system, the role of industry associations in promoting e-commerce exports, and leveraging of Free Trade Agreements (FTAs) to promote e-commerce exports and build a stronger digital economy. “E-commerce has clearly played a phenomenal role in the rise of economies such as China’s. India must catch up fast with its domestic and export potential. In its quest to achieve a $5 trillion economy, the Government of India should boost digitalization, push inclusivity in ways that support MSMEs, and empower small businesses to venture into the online ecosystem and diversify their operations in the global marketplace,” the report said.

This will help set the industry on a growth trajectory that unlocks its full potential and contributes significantly to India’s exports and economic growth.

FTP 2023: Enabling provisions for e-commerce exports

Districts as Export Hubs Initiative

This scheme aims to boost India’s foreign trade by decentralizing exports promotion and creating institutional mechanisms (state and district export promotion committees) at the state and district level to strategize exports.

Dak Ghar Niryat Kendra facilitation

Dak Ghar Niryat Kendras, to be operationalized across the country, will work in a hub-and-spoke model with Foreign Post Offices (FPOs) to facilitate cross-border e-commerce. The aim is to enable artisans, weavers, craftsmen, and MSMEs in remote and land-locked parts of India reach international markets.

E-commerce Exports Hubs

Designated hubs with warehousing facility will be notified to help e-commerce aggregators with easy stocking, customs clearance, and returns processing. Processing facility is expected to be allowed for last-mile activities such as labelling, testing, repackaging, etc.

PM MITRA

The Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible to claim benefits under the Common Service Provider (CSP) Scheme of the Export Promotion capital Goods Scheme (EPCG).

Ease of doing business

One of the key initiatives of the FTP is the introduction of online approvals without physical interfaces. The policy factors in automatic approval of various permissions based on process simplification and technology implementation.

E-Certificate of Origin

Revamping of the e-Certificate of Origin (CoO) platform proposed to enable self-certification of CoOs as well as automatic approval of CoOs, where feasible. Initiatives for electronic exchange of CoO data with partner countries envisaged.

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