Currently, items of lesser value such as ethnic Indian clothes, handicrafts, health and beauty products are often sent in parcels through courier companies and are not captured under regular export data, depriving them of incentives available to regular exporters. Photo: Ramesh Pathania/Mint
Currently, items of lesser value such as ethnic Indian clothes, handicrafts, health and beauty products are often sent in parcels through courier companies and are not captured under regular export data, depriving them of incentives available to regular exporters. Photo: Ramesh Pathania/Mint

Govt may incentivize exporters taking the e-commerce route

Part of the upcoming foreign trade policy, the move is likely to benefit exporters of handicrafts and ethnic clothes

New Delhi: The commerce ministry is working on a proposal to provide incentives to exporters shipping items through e-commerce channels as part of its upcoming foreign trade policy. The move is expected to benefit exporters of handicrafts and ethnic clothes among others.

Currently, manufacturers and exporters who ship goods out of the country through the commercial consignments route only get export benefits. However, items of lesser value such as ethnic Indian clothes, handicrafts, health and beauty products are often sent in parcels through courier companies and are not captured under regular export data, depriving them of incentives available to regular exporters.

The value of such items shipped through couriers have an upper ceiling of 25,000 and often categorized as samples.

A commerce ministry official said on condition of anonymity that there was a general consensus within the ministry that e-commerce is increasingly becoming an important segment of international trade and needs encouragement.

“E-commerce is a very good way of increasing country’s exports. Exports are also happening through e-commerce route but they are not getting any benefits available to commercial exporters. The potential is high and they have the rightful demand," the official said.

The official said the ministry is now discussing what incentives to offer e-commerce exporters. “The practical difficulty is how to ensure that the incentive reaches the actual targeted beneficiaries. It is still under discussion," he added.

While courier companies have been lobbying to get the incentives, holding that they encourage e-commerce, the official said such carriers are just transporters and the ministry is aiming to help the exporters.

Utsav Fashion, a global e-commerce company for Indian ethnic wear, currently sells to over 200 countries and has a turnover of over 100 crore. The company gets 95% of its business from the international market and the rest comes from India. “We do not get any export benefits," said Manoj Kumar Sarawgi, founder of Utsav Fashion. “Different departments in the government have different languages; if they came under one page we would get the benefit. Ministry of commerce, ministry of finance, customs department and RBI (Reserve Bank of India)... most of them are individually in favour of giving us export benefits but nothing has happened so far," he said.

“Currently all the handicrafts and handloom e-commerce exports are routed via countries like Pakistan, Sri Lanka, China and Bangladesh and India stands to lose," he added. The company says export benefits provided by the government will help it reduce the prices on its website by around 5-7%.

There is currently no data available with the government on the size of exports through the e-commerce route. An ebay India official said the e-commerce portal currently has 30% or more than 15,000 sellers on its site regularly shipping to countries outside India.

According to the company, on an average a seller ships to about 30 countries.

“This will be a big boost to Prime Minister’s ‘Make in India’ campaign," said Latif Nathani, managing director of ebay India. “E-commerce is a more recent phenomenon. In the past, an exporter meant a big business house. It is only now that because of technology a guy sitting in Dharavi has started to export and hence government is considering to tweak the laws accordingly," he added.

An official from an industry lobby group said he was aware of the move by the government and the commerce ministry may start it as a pilot project, providing incentives to handicraft e-commerce exporters to begin with.

Manoj Gupta, founder of Craftsvilla.com, an online seller of handicrafts and Indian apparel, said the company gets 20% of its orders from outside India. The proposed move by the commerce ministry will encourage small sellers to export more, he said. Craftsvilla receives close to 50,000 orders every month and generates annual revenue of 110 crore.

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