It was Nandan Nilekani who put Thomas Friedman on to the courier industry, christened Flattener #8, in his legendary book The World Is Flat. Friedman quotes the chairman and CEO of UPS, Michael Eskew, as saying: “You know who the majority of our customers and partners are? Small businesses. That’s right … they are asking us to take them global…”
That was 10 years ago.
Fast forward to 2016. According to industry data compiled by China’s Nanchang University, there are as many as 5,000 cross-border e-commerce platforms and 200,000 enterprises conducting cross-border e-commerce whose exports totalled $522 billion in 2014. In an article published in Forbes.com (July 8, 2016), Kenneth Rapoza says, “Chinese manufacturers are finding new ways to reach the Americans. Amazon is there to make it happen.”
Now coming back to the situation at home. India’s e-commerce exports are a mere $1.4 billion—or 0.3% of the country’s exports—according to the Federation of Indian Export Organisations statistics. This is despite all the media attention on e-commerce. What’s happened? Has India missed the bus yet again?
Perhaps we haven’t. But there is no denying the fact that something big is missing. None of the majors—Snapdeal, Flipkart or even Amazon—are, in fact, accessible from the US or anywhere else for buying anything from India. Snapdeal or Flipkart will not even let you enter a country code other than India on their e-commerce portal.
Amazon.in will let you enter a US mobile number and even send you a cross-border verification code, but will not let you enter the five-digit zip code for delivery. Where does a foreigner shop for his exotic, organic, handmade, made-in-India product?
Last month, India’s commerce secretary said at an event in London that “e-commerce platform is fast emerging as a new trend in global trade and SMEs should use this medium to get direct access to the world markets.” After having announced an e-commerce export scheme on April 1, 2015, in the Foreign Trade Policy 2015-20, it took a year for the commerce ministry to come up with a definition of e-commerce.
The Reserve Bank of India (RBI) took many years to issue its first guidelines for e-commerce in a circular in 2010, limiting transactions to $500 via a Nostro account. Later, in 2013, RBI enhanced the limit to $10,000. One wonders if an average Indian SME can wade its way through these instructions.
Customs are still to allow e-commerce exports through courier. There are restrictions on exports—unheard of in any country—permitting only commercial samples and gifts. Normal exports must go through standard export procedures and not those of universal expedited shipments. Compare this with China, and you find that their customs are operating 12 special zones for e-commerce with their proprietary e-payment portal.
If India is to at all catch up, and realise its Make-in-India potential, some innovative steps are required from the North Block. Export e-fulfilment centres with on-spot customs services and the likes of FedEx, DHL, UPS or TNT managing the logistics are an answer. But India has never been able to leverage the relationships between transportation, warehousing, customs, information & communications technology and logistics service providers.
This has resulted in high cost outcomes, uncertainty and low reliability. It’s a recipe for disaster in a world where
India is up against the Chinese e-commerce motto, which says “all days, all directions, zero distance.”
By Uddhav Kumar
The author is a freelance e-commerce research analyst