The Union Budget 2024-2025 calls for the creation of E-commerce Export Hubs on a public-private partnership (PPP) model but urgent and sustained efforts are needed to achieve the objectives of the Foreign Trade Policy ( FTP, 2023)
In a world where digital technologies and globalization continue to lower trade barriers, the rise of e-commerce will be the next driver of economic growth. The e-commerce sector in the Asia-Pacific region (APAC) was estimated to be worth US$ 2.9 trillion in 2022 and is expected to reach US$ 6.146 trillion in 2030. Within APAC, India, with a high GDP growth of 8.2% (in real terms). in FY24), thriving digital infrastructure, a dynamic MSME sector, is one of the largest and fastest growing markets for e-commerce. FTP 2023, estimated the potential of ecommerce in India to be $200-300 billion by 2030.
With the global B2C cross-border e-commerce market growing at a rapid pace, Indian exporters, especially MSMEs, have many opportunities to tap into new markets and to grow their businesses. With 95% of the businesses made by MSMEs in the country, their access to the export market is essential to the achievement of the government’s objective of reaching US$1 trillion in exports by the year 2030.
Improving access of MSMEs to Local and Global Markets
In season 1St At the Asia Pacific Policy Forum held in New Delhi in 2024, policymakers, women’s self-help groups, MSME organizations and retailers pointed out that global e-commerce giants such as Amazon, Etsy, Walmart and eBay plays an important role in development. e-commerce exports. These companies have become important enablers of the environment, investing heavily in technology and collaborating with partners to facilitate the process. They support MSMEs and D2C startups in building strong export businesses, by connecting with suppliers and buyers and solving problems along the export route. In particular, these platforms address the core challenges of outsourcing by providing integrated payment gateways with multiple channels and seamless currency conversion. They also provide efficient logistics solutions using their logistics infrastructure, ensuring cost-effective storage and timely delivery. Online dashboards help manage compliance requirements effectively. Recently, with innovative and path-breaking initiatives by government agencies like DGFT, through alliances/collaborations with international organizations like UNESCAP, business organizations and private sectors, e-companies commerce played an important role in training. , building capacity, and expanding our overseas dealer network. Examples of such multi-stakeholder efforts were showcased at the event, which opened up policy makers across the APAC region to share their best practices.
India’s plan to breed in APAC countries
Policymakers and experts across APAC countries have concluded that FTP 2023 marks an important step for e-commerce exports by officially recognizing the sector and addressing its key challenges. The policy calls for the establishment of designated e-commerce hubs with warehousing facilities to support e-commerce aggregators and facilitate processes such as warehousing, authorize goods and returns. The Districts as Export Hubs (DEH) initiative, which seeks to promote each district as an export hub by leveraging the opportunity to export specialized products to all 765 districts of India, can also adopted by APAC countries.
How to reach FTP’s goal of $300 billion?
All APAC countries have come up with various measures to support MSME exports. At some point, when exports are going through tough times, India may look at some of the best practices in the APAC region and revamp its policies to make our exports more sustainable. be competitive and reduce compliance costs. Apart from removing export value restrictions, integration of export and postal services with ICEGATE can facilitate this process and help exporters to claim export benefits.
E-commerce exports require special strategies that are different from traditional business. Inventory monitoring and compliance procedures must be simplified and digitized to reduce the administrative burden on exporters. In addition, a supportive policy framework including export financing for MSMEs, financial incentives, simplified procedures for repatriation, and improved logistics and infrastructure digitalization is essential to strengthen this sector. It is important to understand the different types of e-commerce sales and the strategies and methods to support them.
Other proposals that emerged during the APAC e-commerce conference include government support for the Overseas Warehouse Model or Forward Deployment Model, where retailers ship and store their goods in warehouses in destination countries. to them in advance, in order to speed up delivery and improvement. customer satisfaction. Setting up E-commerce Export Hubs under PPP as proposed under the Union Budget (2024-2025) is a step in the right direction. The government can work with other countries, to establish such centers/repositories outside the country to speed up the delivery.
Focusing on international best practices that India can emulate, China is already creating cross-border digital spaces. The Digital Trade Zone (DFTZ) has been launched in Malaysia in partnership with Alibaba Group to connect Malaysian SMEs globally. Malaysia External Trade Development Corporation (MATRADE) has signed an MoU with Amazon Global Selling to facilitate cross-border e-commerce, which includes improving the availability of Malaysian products in the USA through Amazon e-shops. India may look at such initiatives, which help MSMEs to build brands.
As e-commerce exports continue to grow at a rapid pace, it is important to establish dedicated clearance channels for e-commerce shipments at multiple ports of exit and facilitate reconciliation policies. of payments. A 25% discount on the low e-commerce shipping difference should be deducted. Coordinating the self-disclosure process for payments with the RBI and establishing a joint approval process to facilitate the necessary administrative procedures. Although the government has come out with new FEMA regulations to deal with this and has enabled AD banks to facilitate payment reconciliation, these banks need to have the necessary network, training and where they can work effectively. you are stable. To conclude, moving to paperless trade, removing barriers and streamlining export processes in PPP mode will make the target of $300 million exports in e-commerce achievable.
Ka- Dr. Arpita Mukherjee, Professor at ICRIER
Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the views of ET Edge Insights, its management, or its members.
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