According to reports, key players in the industry have advocated for the central authorities to allow foreign direct investment (FDI) in inventory-based e-commerce platforms that engage in the export of goods.
As per the news agency PTI, Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi has indicated that the Department for the Promotion of Industry and Internal Trade (DPIIT) has received requests from ecommerce platforms to reconsider the Foreign Direct Investment (FDI) policy on the matter.
According to the existing policy framework, foreign direct investment (FDI) is allowed exclusively in e-commerce platforms following a marketplace model, while it is prohibited for inventory-based e-commerce entities.
Sarangi mentioned that the Directorate General of Foreign Trade (DGFT) is actively engaged in implementing various measures. Additionally, he noted that the DGFT is considering the concept of establishing e-commerce export zones to boost exports through online platforms.
“For export purposes, if these (rules) could be revisited is something that we are requesting the DPIIT to examine and explore… and this could be one step forward for creating the ecommerce export zones that DGFT and its team has been working on,” Sarangi was quoted as saying.
Simultaneously, efforts are in progress to provide warehousing facilities and expedited packaging clearance services within these e-commerce export zones.
“But the present policy ecosystem does not support creation of this because the export-oriented unit (EOU) model is exclusively for manufacturing. But here we are talking of a facility which is not exactly manufacturing but a little bit of processing and packaging,” he added.
According to Sarangi, the Directorate General of Foreign Trade (DGFT) is actively constructing an Export Oriented Unit (EOU) model specifically tailored for e-commerce exports, starting from the ground up. He remains optimistic about persuading the Department of Revenue regarding the viability of this innovative approach.
“The possibility that our people will be able to sell their own brand to the entire globe using ecommerce platform is something which would require a lot of mindset change…So we are working with the DoR, RBI, and the DPIIT to see how this mindset change can come,” he said.
Highlighting the government’s efforts to boost e-commerce exports, he mentioned that the DGFT is collaborating with the Department of Revenue to conceptualize an initiative resembling the ‘composition levy scheme.’ This initiative aims to exempt smaller players from GST until they reach a specific threshold export value.
Sarangi emphasized that efforts were underway to guarantee that benefits and incentives provided by the central government, such as duty drawback, Remission of Duties and Taxes on Exported Products (RoDTEP), and Rebate of State and Central Taxes and Levies (RoSCTL), are effectively delivered to the intended recipients.
According to reports, the DGFT has entered into a collaboration with the Department of Post to enhance and broaden Dak Niryat Kendras and foreign post offices (FPOs) for the purpose of optimizing e-commerce exports. Sarangi highlighted that over 1,000 such Kendras are in the pipeline, operating on a hub-and-spoke model to facilitate rapid customs clearance and ensure a streamlined export process for e-commerce entities.
Internationally, the department is collaborating with postal services from various countries to establish a comprehensive online tracking system for e-commerce export shipments.
There are reports suggesting that DGFT is considering collaboration with private entities to boost awareness and support for e-commerce exports. Providing examples, Sarangi mentioned that the DGFT is on the verge of signing a Memorandum of Understanding (MoU) with Amazon to launch an initiative aimed at training e-commerce exporters in 20 districts.
He additionally mentioned that the department is in the process of developing a comparable proposal in collaboration with Flipkart and Walmart. Discussions are also underway with entities like eBay to extend the trial to additional districts.
Meanwhile, Sarangi anticipates that India’s e-commerce sector will drive the expansion of both goods and services exports, reaching a market size of $2 trillion by 2030. These remarks were made shortly after a senior Amazon executive announced the platform’s intention to increase exports from India to $20 billion by 2025.