Value proposition is key to the success of e-commerce export hubs scheme

The Directorate General of Foreign Trade (DGFT) has put out the draft modalities for pilot launch of e-commerce export hubs (ECEH) and invited proposals for setting up ECEH. The idea is to let ECEH provide predictability and shortest-possible turnaround time for e-commerce exports, easy re-import for e-commerce returns or rejects, and bring various cross-border e-commerce stakeholders under one roof, says the DGFT.
 

In normal parlance, e-commerce refers to delivery of goods or services over digital or electronic network but when the DGFT refers to e-commerce of exports or services, it covers all transactions, including physical exports of goods through the Customs barriers, where selling is through internet on an e-commerce platform, the payment for which is received through international credit or debit cards, or other authorised electronic payment channels. The Foreign Trade Policy 2003 (FTP) devotes an entire chapter on promoting cross-border trade in the digital economy. It envisages ECEH that would act as a centre for creating favourable business infrastructure and facilitations for physical export of goods and financial assistance for e-commerce export promotion projects for marketing, capacity building, and technological services such as imaging, cataloguing, and product video creation of e-commerce goods. The draft modalities have come out nearly 16 months after the announcement of FTP 2023. The draft modalities say that the ECEH shall have two physical components, i.e distinct segregated areas, one fulfilment area for packing, labelling, storing etc. to take place after pre-screening and till a buyer is found, and the other a Customs station where the goods will be Customs cleared after the buyer is found. It may be an inland container depot, airfreight station, or foreign post office depending on the mode of logistics. At present, most exporters have their own websites where they display their products and some of them do receive orders through their electronic platforms and dispatch their goods through appropriate modes of transport. Apparently, the DGFT believes that a large number of exporters would maintain a healthy inventory of their goods at the warehouses of ECEH operators and whenever an order is received, the ECEH operator will be asked to pack and label the goods suitably, file a shipping bill in the name of the exporter, and dispatch the goods through the mode as directed by the exporter, and where feasible, the ECEH operator will aggregate the cargo from a number of exporters to reduce the logistics costs. 
 

The draft modalities are quite detailed but these will need suitable vetting by the revenue department. The DGFT says that based on the draft modalities, the government would like to initiate pilot launch of ECEH, and after the pilot launch and suitable feedback(s), notification(s) and circular(s) shall also be issued.It is difficult to say how the ECEH scheme will perform because much depends on whether the exporters see any value proposition in exporting their goods via ECEH. An important question is whether the exporters will be willing to share with the ECEH operators the details of their customers and prices at which they sell. Another issue is whether they will prefer to hold the inventories at the ECEH operator’s premises. The third consideration is the cost at which the ECEH operator will give the required services. A few good success stories may help the scheme attract more exporters. 

Email: tncrajagopalan@gmail.com