Consultations Initiated to Enhance E-Commerce Exports
The Ministry of Commerce and Industry has embarked on discussions with a diverse array of industry players, from prominent e-commerce titans such as Amazon and Flipkart, a Walmart subsidiary, to Indian small-scale manufacturers and mid-tier retailers.
This initiative aims to identify innovative strategies that could elevate e-commerce exports, particularly in light of the significant 50 percent tariffs imposed by the United States on Indian goods.
According to sources familiar with the matter, initial consultations have already taken place, and the Department for Promotion of Industry and Internal Trade (DPIIT) has scheduled a second round of dialogues for the upcoming week.
The focal point of current discussions is to enhance exports via the e-commerce Export Hubs (ECEHs) model, which was introduced in the recent Union Budget, while also considering measures that could support Micro, Small, and Medium Enterprises (MSMEs).
Disparate opinions have emerged among stakeholders concerning the inventory-based model of e-commerce. Reports indicate that MSMEs are advocating for the government to permit Foreign Direct Investment (FDI) in this model, positing that it would alleviate compliance challenges. However, there exists notable resistance to this proposal among certain retailers.
At present, the marketplace model of e-commerce allows for 100 percent FDI under an automatic route, while the inventory-based model remains off-limits for foreign investment. The government is assessing the feasibility of the inventory model, as MSMEs argue it could mitigate compliance burdens amid the backdrop of U.S. tariffs; yet, retailers remain opposed to such reform.
In the inventory-based framework, e-commerce entities can possess and directly sell goods and services to consumers. Contrastingly, the marketplace model merely enables e-commerce platforms to function as intermediaries connecting buyers and sellers.
It is essential to note that India’s e-commerce ecosystem is predominantly composed of small enterprises that export products valued between $25 and $1,000. Popular categories include handicrafts, art, literary works, garments, and jewelry. A report by the think tank GTRI suggests that India’s e-commerce exports may have the potential to soar to $350 billion by 2030.
Experts elucidate that current e-commerce exports from India hover around $5 billion, starkly juxtaposed with China’s staggering $300 billion. Moreover, GTRI’s analysis indicates that India’s e-commerce exports could accelerate more rapidly than the country’s IT exports did in the early 2000s. Regardless of this forecast, the existing export figures fall drastically short of expectations.
The intricate regulatory landscape surrounding e-commerce exports in India resembles a patchwork of rules designed for conventional B2B exporters, leading to substantial compliance burdens on smaller firms.
To rectify these issues, the report recommends that the Indian government formulate a distinct e-commerce export policy. Effective e-commerce regulations in countries such as China, Korea, Japan, and Vietnam have successfully facilitated global sales for numerous businesses.
Source link: Indianexpress.com.
