Home Framework Why India Needs a Well-Defined E-Commerce Export Framework

Why India Needs a Well-Defined E-Commerce Export Framework

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The Revised Foreign Trade Policy (FTP) is expected to come into force on April 1, 2022. As a policy that remains in effect for a period of 5 years, the FTP provides a basic policy framework and strategy for export promotion and Trade. Existing export policies have largely taken traditional offline B2B exports into account and having a differentiated policy framework for e-commerce exports is essential to enable MSMEs to start exporting with barriers to entry weaker.

The government has rightly identified exports as a key pillar for India’s economic recovery and subsequent growth in a post-COVID 19 landscape. Thus, it has become more critical than foreign trade policy, which provides the basic framework of export and trade promotion policy and strategy, helps realize an ambitious export vision that will truly help India to become “Aatmanirbhar”.

CTF is an important policy instrument to achieve this goal. Through FTP, it is important to create an enabling policy framework for e-commerce exports that lowers the barrier to entry for MSMEs to start exporting and helps promote e-commerce as an export channel. These exports are a potential route to a USD 400 billion market, with relevant markets for MSMEs worth USD 300 billion.

To liven up the discussion on the same topic, The Plunge Daily teamed up with Empower India for a Twitter Space session on “FTP Priorities for the MSME Sector” to highlight the need to prioritize trade export e-mail in FTP 2022 for the growth of India’s MSME sector.

During the panel discussion, Vinod Kumar, Chairman of Indian SME Forum, said, “We have a 2,600-page foreign trade policy. So if an entrepreneur wants to get into exporting, he has to go through maybe 3,000 odd pages. In today’s era, if we are looking to empower people, we need to have a short and sweet policy that is easier for an entrepreneur to understand to immediately take the next step to speed up the whole process. We shouldn’t have a policy that prevents the guy from entering b2c markets.

Shweta Kathuria, Head of Tax Policy, US-India Strategic Partnership Forum highlighted the need for GST parity for MSMEs who have jumped on the e-commerce bandwagon

“Every supplier who sells goods on an e-commerce platform is required to obtain the mandatory GST registration regardless of the turnover, which is not the case when you sell it offline or in physical stores because then if you are selling if you are a supplier of goods and your turnover is less than 40 lakhs and if you are a service provider, which is less than 20 lakhs then you are not not required to obtain GST registration, she said.

Dr. Avik Sarkar, Professor at the Indian School of Business, pointed out that “e-commerce can boost international export for the MSME segment. As we all know, the traditional export way is quite difficult and complicated. You have to go through associations, you have to go through trades, you have to send product samples to foreign countries and often people can like that. E-commerce has made it easier for many gamers. Several MSMEs export through e-commerce, but their percentage is still quite low. There must therefore be an impetus for the export of MSME e-commerce in the next foreign trade policy.

The panelists made the following recommendations regarding e-commerce exports to be incorporated into the upcoming Foreign Trade Policy 2022. These include:

  • Increase awareness of e-commerce exports
  • Implement end-to-end digitization for export-related processes
  • Develop specialized logistics capabilities for e-commerce exports
  • Simplify compliance and regulatory requirements for e-commerce export
  • Build long-term capabilities and programs to support e-commerce export growth