“E-commerce, having evolved vastly over the years, is still at a very nascent stage and even as exports through online medium has number of benefits, the required ecosystem will take time to develop with better and favourable policies from the Government,” said Ajay Sahai, Director General and CEO of the apex body of Indian export promotion organisations, Federation of Indian Export Organisations (FIEO). A report by HSBC on growth outlook for India identifies digital adoption and high-skilled exports as two growth engines and it does come as a whiff of fresh air in the current state of Indian exports. True, the correlation between economic growth and global trade is undisputed and with MSMEs across India currently contributing to over a third of the GDP and accounting to around half of the country’s exports, it only makes sense for the Government to focus on increasing the MSME share in overall exports. Removing barriers and making the entire process of exports easier is immensely important, especially at a time when businesses are emerging from the impact of an unprecedented pandemic.

The size of the global market, the opportunity it has to enable growth have made exports an attractive space to enter for Indian manufacturers and business owners for decades. However, there have been a number of challenges in the process, like supply chain complexities, investments, cross-border payments and even uncertainty of demand in the foreign market, among others. First is the banking challenge where it’s difficult for a small enterprise to secure funds instantly as the export order comes and ‘the entire banking system is based on export orders which should not be the case for online exports. The banks should come up with a system where they release the funds based on the previous year’s export orders and without asking for collaterals,” said Sahai. Also, the value of the consignment that the banks consider is mostly the ‘nominal value’ and is very different from the actual value a business gets when the goods are sold in the international market and Sahai added that the “Reserve Bank of India should not consider the actual value of the consignment at the time of export as the final one.” Generation of electronic BRC (Bank Realisation Certificate) also is an issue with the e-commerce exporters since the cost of obtaining it eats up the profit margin of small businesses. EBRC is an important document to square any outstanding payment from the buyer against the export of goods or services.

Besides, more often than not, the export promotion schemes by the Government are not flown down to the small business owners, like the former Merchandise Exports from India Scheme (MEIS), a scheme designed to provide rewards to exporters to offset infrastructural inefficiencies and associated costs, and the likes. Government schemes, announced during August 2021, including the Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL), which enable exporters to get a refund of the Central and State duties, taxes, and levies, etc., and give duty credit transferable and sellable scrips on the FOB value of export, respectively, do not get flown down to the small business owners since the ICEGATE is not linked to many courier terminals or foreign post offices. Sahai further said, “India has more than 35 international airports, however e-commerce shipments happen only through Delhi, Mumbai and Bengaluru airports. The Government should work towards enabling customs clearance and e-commerce shipments through other international airports too. Also, in terms of connectivity, India Post should come forward and tie up with the postal authorities of as many countries for easy tracking of consignments, etc.”

Another major challenge facing e-commerce exports is the problem of returns where, as Sahai said, “the customs office should come up with an identification code which can be the shipping bill itself in order to facilitate these returns and to form a linkage between the products shipped out and being imported back for return.” Recently while the Government is preparing the revised draft of Foreign Trade Policy, several e-commerce firms along with industry bodies have been consulting the Government to push for e-commerce specific reforms to boost exports. The recommendations include developing low-cost trackable solution by India Post as well as strengthening network of foreign post offices to act as delivery hubs, launching a single interface for MSMEs to avail their authorised dealer and import-export code through the Indian Customs of Central Board of Indirect Taxes and Customs’ ICEGATE platform.

Even as the challenges have existed for years together now, today the e-commerce exports have lowered the entry barrier for MSMEs of the country to go global and the technological upgradation and availability have brought in a transformation in the exports business. The industry is also betting on the new draft of the Foreign Trade Policy to give e-commerce exports a much needed push and recognition. Government, meanwhile, is already pushing the export business by small businesses – both traditional as well as online.