The government is thinking of creating specialized zones to encourage exports through online shopping. The intention is to free businesses from most of the existing compliance burdens while granting them flexibility for cross-border direct-to-consumer sales.
According to a suggestion in the commerce ministry’s 100-day program, the planned e-commerce export zones will be driven by private investments, and the government will implement the necessary regulatory changes to make them easier to operate.
Currently, export consignments shipped through e-commerce are governed by the same laws as business-to-business exporters, despite the fact that these consignments are usually small and meant primarily for end users. This increases costs, causes delays, and restricts some of the duties required for sales to consumers.
At the designated e-commerce export hubs, the ministry intends to house storage, customs clearance, returns processing, labeling, testing, and repackaging, among other facilities. These will resemble export-oriented units (EoUs).
Estimates suggest that by 2030, e-commerce exports might reach US$200–300 billion, but they are now only around US$2 billion. Global e-commerce exports are expected to grow from their present level of US$800 billion to US$2 trillion by 2030.
To increase e-commerce exports, it is imperative to increase the value cap per consignment, simplify the procedures for accepting payments, and allow returns to be reimported duty-free.
A system for managing returns of products exported through internet shopping would need to be set up. The returns on e-commerce exports average from 15 to 20 percent, thus allowing them to return to India duty-free is essential.
Adjustments would also be required in this scenario because the Foreign Exchange Management Act requirements provide that export proceeds must be remitted to India within 270 days, which may not be feasible in the case of e-commerce exports.
Another issue is not offering price flexibility, which is crucial for e-commerce. In e-commerce exports, discounts or price increases after declaring the export price would need to be approved, and the RBI would need to be contacted.
There should be no deviation of more than 10% in the currency received for other exports from the specified export price.
The amount of documentation required would also need to be reduced, since exporters that engage in e-commerce currently have to submit the same set of documents and pay the same bank fees as larger exporters.
