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How to boost e-commerce exports

India’s e-commerce exports have the potential to grow at a faster pace than the IT exports in early 2000s. With global Business to Consumer (B2C) e-commerce exports estimated to grow from $800 billion to $8 trillion by 2030, India’s strengths in high-demand customised products, expanding seller base, and higher profit margins per unit of export place it in a prime position to benefit from this trend.

Despite its potential, India’s current e-commerce exports remain far below their potential. Currently, they account for only $2 billion, less than 0.5 per cent of India’s total goods export basket. The country must plan to export $350 billion, or about one-third of its total goods, through e-commerce by 2030.

This will require focus on developing the ecosystem for e-commerce exports as India’s current e-commerce export provisions are a patchwork of rules framed for regular B2B exporters. This creates an enormous compliance burden on small firms, and India needs to address all such issues in one place. To address such needs, the government may issue a separate E-commerce Export Policy. E-commerce policies in China, Korea, Japan, Vietnam, etc., have helped many firms sell globally.

As the needs of the e-commerce export sector are vastly different from the regular export sector, the E-Commerce Export Policy should be an independent document addressing all pain points faced by exporters.

This policy should be jointly issued by the RBI, Customs, and DGFT after making necessary changes to their regulations.

Action points

Twenty-one recommendations have been identified to increase e-commerce exports from India. These cover five broad categories:

Redefine the responsibilities of sellers. Small and medium-sized firms rely on e-commerce platforms for global exposure and value-added services, such as timely payment assurance. However, this conflicts with FEMA regulations as the platform is responsible for receiving payment, while the ownership of goods remains with the seller.

China has solved this issue by separating the responsibilities of the seller and the compliance process entity. The seller is only responsible for creating an e-commerce marketplace account, obtaining product-specific licences, and creating commercial invoices and packing lists. This separation has been a major contributor to China’s e-commerce export industry and should be adopted by India.

Simplify payment reconciliation. Payment reconciliation is a major roadblock for third-party e-commerce exporters. The RBI guidelines for B2B exports need changes to accommodate B2C exports. The changes needed to simplify payment reconciliation are:

Sellers must receive forex within nine months of shipment, which is challenging for shipments sold over 12-18 months. More time is needed to reconcile payments.

Lower restrictions on receipt of export proceeds: Forex received must not vary more than 25 per cent of the value stated in the export document. A 25 per cent reduction cap is too restrictive for e-commerce sales that involve discounts and returns.

E-commerce exports have a high number of small shipments and invoices per large shipment, which increases the payment reconciliation burden. An expensive consignment-wise EDPMS (Export Data Processing and Monitoring System) closure process must be eliminated.

E-commerce exporters receive payments in rupee (post-conversion), which requires an additional document — Foreign Inward Remittance Certificate (FIRC) — for export remittance. The requirement for FIRC must be eliminated, and e-commerce exporters should be allowed to receive forex like regular exporters.

Simplify foreign inventory management documentation: Documentation burden for forward deploy inventory to an overseas warehouse is cumbersome. Foreign inventory management documentation must be simplified.

Online bank processes: Issuing Authorised Dealer (AD) code letters and submitting documents to banks are done offline. For e-commerce exports, banks don’t recognise the fund flow as an export transaction, causing a delay (around two weeks) in AD code letter generation.

Simplify export policy and process: Raise the value cap for e-commerce exports from ₹5 lakh to ₹25 lakh. As most trade is shifting to GVCs (global value chains) requiring timely deliveries, exporters must be allowed to choose the shipment mode as per their business requirements.

Create separate customs codes for e-commerce shipments to avoid delays caused by ad hoc document requests by customs officials and allow green channel clearance for e-commerce shipments, similar to China’s customs supervision codes.

Exempt import duties on rejects and treat reimports as duty-exempt imports in line with global practices to reduce costs and expedite the delivery of merchandise.

Reduce the Courier Shipping Bill processing time from 3-4 hours to less than 20 minutes by making changes in the Express Cargo Clearance System (ECCS).

Simplify the format of the Courier Shipping Bill (CSB-II) to allow filing of more than one order details in one shipping bill.

Allow e-commerce exporters to claim GST refunds and export incentives to make the export product globally more competitive.

Develop business ecosystem: Launching the India Quality Product (IQP) label for high-potential product categories can help small firms with quality products to earn more money per sale.

The government should support all modes of e-commerce exports, whether a firm uses its own website or platforms, to maximise India’s exports. Over one lakh firms are registered with such platforms for exports.

The government can consider paying the product listing fee on global marketplaces to support small firms. Governments in countries like Singapore and New Zealand finance 70-90 per cent of such expenditures incurred by small firms, and the government may set aside ₹5,000 crore annually for this purpose.

Recognising e-commerce export houses can benefit small firms looking to export. These firms can help sellers develop product categories, brands, and international markets, and provide market intelligence and training, allowing sellers to focus on the product and outsource everything else.

Set up e-commerce national trade network. This network will bring together the RBI, Customs, DGFT, GSTN, India Post, courier companies, platforms like Amazon and eBay, and the user to create a central technology platform that streamlines the entire process.

E-commerce will democratise export process by allowing lakhs of small firms to export. Exports will grow exponentially with removal of onerous regulatory compliances.


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