India should aim to export $350 billion worth of goods through e-commerce by 2030, and for that the government needs to address the sector’s vulnerabilities by taking steps like formulating a separate policy, says a report by the economic think tank GTRI. The Global Trade Research Initiative (GTRI) said the current e-commerce export regulations in India are a patchwork over the rules that apply to regular B2B (business-to-business) exporters.
India’s e-commerce exports have the potential to grow faster than its IT exports in the early 2000s, it said. With global business-to-consumer (B2C) e-commerce exports estimated to reach $800 billion by 2030, it is well positioned to capitalize on this trend.
GTRI has identified 21 action points to accelerate the country’s exports through online media. India’s current e-commerce export numbers remain well below potential. Currently, e-commerce exports account for just $2 billion, less than 0.5 percent of the country’s total goods export basket. “The country must plan to export $350 billion, or about a third of its total goods, through e-commerce by 2030. This requires a focus on developing the e-commerce export ecosystem to realize its full potential,” the report said. It added that the medium’s current export regulations place a huge burden on small businesses to comply with regulations.
To accommodate such demands, the report recommends that the government issue a separate e-commerce export guideline. Such policies in countries like China, Korea, Japan and Vietnam have helped many companies sell worldwide. Since the needs of the e-commerce export sector are very different from those of the regular export sector, the e-commerce export policy should be an independent document that addresses any vulnerabilities exporters face.
It added that this policy should be issued jointly by RBI, Customs and the Directorate-General for Foreign Trade (DGFT) after making the necessary changes to their regulations. It should contain provisions on business development, reducing administrative burdens and establishing a national trading network. The GTRI proposals include redefining seller responsibilities; simplifying payment reconciliation and processes; development of a business ecosystem; and establishment of a national trade network for the medium.
Small and medium-sized businesses rely on online platforms for global presence and value-added services, such as B. punctual payment assurance. However, this is contrary to FEMA (Foreign Exchange Management Act) regulations, as the platform is responsible for receiving payment, while ownership of the goods remains with the seller.
Compliance procedures can be challenging for small sellers due to the high volume of sales. The report added that payment reconciliation is a major obstacle for third-party e-commerce exporters and RBI policies for B2B exports need to be changed to allow B2C exports. To simplify payment reconciliation, more time to receive export proceeds, fewer restrictions on receiving export proceeds, and an annual financial reconciliation process were proposed. and simplification of foreign exchange payments.
“A 25 percent reduction cap is too restrictive for e-commerce sales that involve discounts and returns. Exporters need flexibility in maintaining annual sales and per-shipment restrictions should be lifted,” it said. The report also recommended raising the value cap for e-commerce exports from Rs.5,000 to Rs.25,000 to allow exporters to choose the shipping method according to their business needs.
“As the bulk of trade shifts to global value chains that require timely deliveries, exporters must be allowed to choose the shipping method based on their business needs. China has created an efficient and seamless logistics system to ship goods to global customers,” it added. Also, the government should create a separate Customs Code for such shipments, exempt import duties on refused imports and treat re-imports as duty-free imports, in line with global practices to reduce costs and expedite delivery of goods, and allow these exporters to apply GST to request refunds.
“India should focus on developing market intelligence, organizing training for artisans and facilitating the fulfillment of export orders for high-potential product categories such as handicrafts, jewellery, ethnic clothing, decorative paintings and Ayurveda,” it said. In terms of building the network, it said this will bring together RBI, Customs, DGFT, GSTN, India Post, courier companies, platforms like Amazon and eBay and the user to create a single technology platform that will streamline the whole process.
Ajay Srivastava, co-founder of GTRI, said that the internet, technology and secure online payments have made exporting via e-commerce easy and safe, enabling small businesses from a variety of cities and regions to participate in international trade. Over 100,000 Indian sellers are already exporting via e-commerce and this number is set to multiply. “Exporting through e-commerce channels can result in higher profits per export unit as companies can cut out middlemen such as indenturing agents, bulk buyers and shopkeepers,” he added.