Foreign trade policy may include chapter on e-commerce biz

The upcoming foreign trade policy is expected to have a chapter dedicated to e-commerce in an acknowledgement of the rising volume of digital transactions in the economy.

The policy will likely give a thrust to e-commerce exports, which now receive no special incentives. The move aims to encourage small entities to tap overseas markets for growth and accelerate exports of geographical indication (GI) products and the ‘one district, one product (ODOP)’ initiative.

“A separate chapter on e-commerce is being considered to enable facilitation in terms of quicker clearances, etc. The details are being worked out on various aspects for inclusion with respect to e-commerce,” a commerce ministry spokesperson said in response to a query.

The policy, initially scheduled on 1 April 2020, was postponed by a year due to the pandemic till 31 March 2021 and further to 30 September, 1 April 2022 and finally, 30 September.

Recently, the Federation of Indian Export Organisations (FIEO), India’s apex exports body, requested the commerce ministry to provide incentives for e-commerce to bring them on par with conventional merchandise exports in the coming policy. Mint has reviewed a copy of the FIEO paper presented to the ministry.

“We are gathering inputs from industry, and we want to encourage e-commerce exports in line with the digitization push by the government. Initiatives like one district, one product can pick up pace if e-commerce is encouraged through trade facilitation measures. We are looking into it,” a government official said on the condition of anonymity.

FIEO said e-commerce retail exports, which have the potential to have a 10-times multiplier effect over the next three years, need to be provided with at least the same benefits available to the merchandise sector. FIEO said currently export benefits are either unavailable or the process has not been defined, depriving e-commerce exporters of benefits of the goods and services tax regime, rebate of state and central taxes and levies scheme, and remission of duties and taxes on exported products scheme, among others.

“The need of the hour is to give e-commerce the same treatment as is available to conventional merchandise shipments. A separate chapter in the FTP should enlist all export benefits available to e-commerce, which should be at par with conventional exports,” said Ajay Sahai, CEO and director-general of FIEO.

Incidentally, while the Reserve Bank of India allows online payments for e-commerce up to $10,000, the courier shipping bill and bill of exports restrict it to ₹5 lakh.

“Such an anomaly should be rectified by adopting the same ceiling for all processes and procedures… There is a need to align all ceilings of shipments for e-commerce with a uniform value. How can one expect a small player to be aware of these different limits?” said Sahai.

In 2018, the commerce department raised the value limit for exports through courier service or post to ₹5 lakh from ₹25,000 earlier to facilitate shipments through couriers by e-commerce companies.

The FTP is a set of guidelines and instructions established by the director general of foreign trade in matters related to importing and exporting goods in India. FIEO has also suggested setting up an integrated park for cross-border e-commerce, which should provide comprehensive facilities such as banks, fintech firms, foreign post offices, courier terminals, logistics firms, warehouses, customs collection and tax refunds under a single umbrella.

Arpita Mukherjee, an economist at ICRIER, called the move to focus on e-commerce an excellent initiative. “If the chapter covers measures like support for training to help the onboarding of small and medium enterprises into the e-commerce platform, it will help them to integrate into global value chains and enhance exports. Two key barriers faced by SMEs in accessing the global market are digital inclusion and digital financial inclusion. Quicker clearances through express delivery will also benefit our exporters.”