The government is examining a proposal to allow e-commerce companies with majority foreign holdings to build their own inventory of goods for exports from India, commerce and industry minister Piyush Goyal said.
Under the existing rules the foreign e-commerce companies can only operate as marketplaces in the domestic market and are not allowed to hold their own inventory.
The move will help increase e-commerce exports from India without impacting the business of small retailers, the minister said.
Unlocking a $300 billion export goal
Exports through e-commerce are a rapidly expanding segment in world trade. According to reports the global cross border e-commerce market size is expected to rise to over $ 550 billion in 2025 and further to $2 trillion by 2034. In comparison, India’s e-commerce exports range from $ 4-5 billion a year and the aim of the government is to take it to $200 to$300 billion by 2030. Currently, China dominates the e-commerce export space with exports of $250 billion.
The recent clampdown on e-commerce the US by imposition of duties on even low value e-commerce exports have, however, cast a shadow on these projections. The global presence of e-commerce companies operating from India can be leveraged to increase exports through this route.
The minister said that if such e-commerce firms want to keep inventory for exports, then “I think we have no objection to that”. The policy change would not require a long process, the clarification to the existing rules will be enough, the minister said.
The products that are most suitable for exports through e-commerce are handicrafts, art, books, ready-made garments, imitation jewellery, gems and jewellery, home decor, ayurveda products and sports goods.
Building the ecosystem: E-commerce export hubs and incentives
To support e-commerce exports the government has already come out with a policy for setting up e-commerce export hubs. Some companies have been selected to set up these hubs around airports of Delhi, Mumbai and Bangalore.
The ECEH will have facilities for expedited Customs and security clearance in house. Provision for quality and certifying agency will happen with the hub which will also have the provision of easy re-import policy. Re-import policy will enable the return of e-commerce consignments and rejects without payment of import duty.
The government has also extended the benefits of Remission of Duties and Taxes on Exported Products (RoDTEP) and duty drawback to exports through e-commerce.