India to create a green channel for E-commerce exports
India is looking to create a green channel for e-commerce exports on the lines of China’s cross-border e-commerce-integrated pilot zones which offer streamlined customs procedures to promote faster movement of such shipments.
The move is expected to aid sellers relying on online platforms, especially micro, small and medium enterprises (MSMEs), to tap into the global market and boost India’s exports.
According to the Ministry of Commerce and Industry, India’s overall exports (merchandise and services combined) in November 2023 was estimated to be USD 62.58 billion, exhibiting a positive growth of 1.23 per cent over November 2022.
However, India’s e-commerce exports are currently only $2 billion, or less than 0.5 per cent of its total exports. By 2025, the global e-commerce exports are expected to reach $2 trillion, and India can tap into this opportunity by aiming for $200 billion to $250 billion by 2030.
What is the green channel?
The green channel is a dedicated e-commerce export hub that will have warehousing facilities for easy storage, customs clearance, returns processing, labelling, testing and repackaging.
The green channel will also provide simplified documentation and faster delivery time for e-commerce shipments, which are often small in value and volume.
The green channel will be based on the model of China, which has established 59 cross-border e-commerce pilot zones across the country since 2015. These zones have helped China become one of the largest e-commerce exporters in the world.
“The green channel for e-commerce exports with easier documentation and tripartite awareness raising campaign, simplified customs processes and standard operating practice for product returns must be formed on lines of China, one of the biggest e-commerce exporters, to help streamline the process in India,” said Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises (FISME).
Why is it needed?
According to a report by FISME and IKDHVAJ Advisers LLP, a Delhi-based research and advisory firm, e-commerce exports face many challenges in India, such as:
- High logistics costs due to lack of infrastructure and coordination among various agencies
- High extent of product returns, which are treated as imports and subject to full import duties
- Absence of a single information source that provides a comprehensive and consistent list of all procedures and forms required for e-commerce exports
- Complex cross-border payment mechanisms and reconciliation of remittances
- Low awareness and capacity among MSMEs to leverage e-commerce platforms for exports
The report suggested that a green channel for e-commerce exports would help address these issues and promote India’s exports through e-commerce.
What are the benefits?
The benefits of creating a green channel for e-commerce exports are:
- It will enable MSMEs, which constitute over 90% of e-commerce exporters in India, to access global markets and increase their competitiveness
- It will enhance the ease of doing business for e-commerce exporters and reduce their transaction costs and time
- It will diversify India’s export basket and destinations by tapping into new segments and regions
- It will create employment opportunities and boost economic growth
“E-commerce is one of the fastest growing sectors in India. It has immense potential to contribute to India’s economic development by enhancing trade opportunities, creating jobs, empowering MSMEs, promoting innovation and entrepreneurship,” said Piyush Goyal, Minister of Commerce and Industry.