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India’s coming foreign trade policy may have a separate chapter dealing with e-commerce for the first time amid demands for helping millions of small manufacturers become exporters, said three people familiar with the development.

Several e-commerce firms, including Amazon India, Walmart Inc., and eBay, payment gateway PayPal and industry bodies Federation of Indian Chambers of Commerce and Industry and Confederation of Indian Industry have sent recommendations for export promotion in the new policy.

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The Foreign Trade Policy 2021, which is being formulated, is expected to come into effect on 1 April.

The suggestions made to the Directorate General of Foreign Trade are largely on digitization and call for compliance burdens to be eased for micro, small and medium enterprises (MSMEs).

Companies and industry bodies have recommended creating a ‘knowledge centre’ for spreading export awareness among MSMEs, setting up a separate export promotion council for e-commerce, digitizing and creating a single-window export clearance process.

The draft foreign trade policy is currently under review with commerce minister Piyush Goyal before it is released to government secretaries for any additional consultation, said the first of the three people, who asked not to be named.

Mint has reviewed the recommendation documents.

“The coming foreign trade policy can provide the perfect opportunity for e-commerce exports to scale, and we have been part of forums suggesting structural changes. Awareness and knowledge hubs through export promotion councils, creating foreign post offices in every district and setting up export promotion zones around the country can help remove the structural blockers for MSMEs to boost exports. Digitization of processes and certification can also hold MSMEs in good stead," said Abhijit Kamra, director, global trade, Amazon India.

Last year, Amazon Inc. chief Jeff Bezos said his firm will export ‘Make in India’ products worth $10 billion by 2025. Amazon India has so far facilitated exports worth $2 billion in this mission. The industry, through a series of consultations, has also pushed for digital cataloguing of products produced by MSMEs under the government’s ‘One District One Product’ (ODOP) initiative, providing a real-time traceable database, which will allow e-commerce firms and the government to familiarize themselves with products for potential export in various districts. These catalogues will also help directly connect sellers and manufacturers.

Recommendations have also sought a single interface for MSMEs to avail their authorized dealer and import-export code through the Indian Customs of Central Board of Indirect Taxes and Customs’ ICEGATE platform. This is aimed at making export clearance a 100% online and digitized process.

“Today, 64% of India’s exports are from third-party merchants, which procure products from small businesses. If MSMEs need to be made self-reliant, we need open platforms like e-commerce for them to sell and design policies that make them the beneficiaries, rather than these third-party merchants. Further, only 35,000 MSMEs in the country export, leaving a huge potential for the government to tap the upcoming policies," said Vinod Kumar, president of the India SME Forum, which also sent in its recommendations.

Kumar added that according to the forum’s research, India’s e-commerce industry could contribute close to $20-$22 billion in export trade, with the country needing to focus on B2C trade, which has been hastened by covid.

“We have been hearing that the foreign trade policy will have a lot of indexing for e-commerce, leading to a separate chapter. MSMEs is a high priority for the government," said the second of the three people cited above.

With customers in the US and European markets expecting product deliveries in 7-10 days, recommendations from e-commerce firms have also sought special lanes for faster clearance of e-commerce exports and round-the-clock clearance of these goods at all ports.

“It is still to be seen whether the government considers all the recommendations and counts it under a separate e-commerce chapter, since these changes have an industry-wide effect and not just on e-commerce," said the third person.

Companies have also pushed for scaling foreign post offices in 28 MSME clusters to more than 100, along with end-to-end traceability of even return orders.

In order to ensure return orders are not mislabelled as fresh imports, documentation of export bills is sought as proof of return orders and re-imports.

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