India is making significant strides in establishing an e-commerce export zone and easing the process of foreign exchange realisation for e-commerce exports. This initiative, led by the Directorate General of Foreign Trade (DGFT) within the Commerce Ministry, involves collaboration with the Reserve Bank of India (RBI) and other key ministries, including the Finance Ministry.
The primary focus of these efforts is to provide flexibility in payment realisation to boost exports through e-commerce. DGFT Director General, Santosh Kumar Sarangi, highlighted the vast export opportunities present in the e-commerce sector and emphasized the need for regulatory changes to capitalize on these opportunities. The inter-ministerial working group, comprising various departments such as revenue, post, MSME, DPIIT, and the RBI, is actively working towards facilitating exports in this domain.
A key development in this regard is the increase in the value limit of e-commerce exports through couriers, which has been raised from Rs 5 lakh to Rs 10 lakh per shipment under the new Foreign Trade Policy (FTP) 2023. Furthermore, the Department of Revenue is considering removing this limit based on the outcomes achieved. The Department of Post has also played a pivotal role by establishing 1,000 Dak Niryat Kendras, linking foreign post offices with hinterlands to streamline the export process.
Another significant aspect is the creation of e-commerce export zones, which are intended to expedite export clearances. This is a part of India’s broader strategy to grow its exports through the e-commerce medium, which is expected to reach USD 2 trillion globally by 2030.
However, the growth of e-commerce exports in India is currently hindered by several banking-related issues. Banks tend to charge multiple fees at different stages for the same small-value shipment, significantly increasing the cost of exporting and making it commercially unviable for many small businesses. These challenges include charges for submitting shipping bills, intermediary bank charges during forex transfers, and penalties for bills pending at the Export Data Processing and Monitoring System (EDPMS). These charges often constitute a large percentage of the shipment value.
To address these issues, recommendations have been made, such as creating a single window platform for e-commerce and small-value shipments, standardizing bank charges, defining a time limit for banks to complete all small export-related requests, and exempting shipment value up to USD 1,000 per shipment from monitoring. Additionally, there’s a call for extending the timeline for EDPMS closure from nine months to 24 months and redesigning the courier shipping bill to better reflect payment terms.
This initiative is a significant step towards harnessing the potential of e-commerce in boosting India’s exports and making the process more efficient and cost-effective for exporters, especially small and medium-sized enterprises