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Dedicated hubs will streamline e-commerce exports

As part of the 100-day action plan of the Union government, efforts are being put in place to boost India’s export potential, especially e-commerce export. Accordingly, the Directorate General of Foreign Trade (DGFT) and the Department of Revenue are reportedly working to establish designated e-commerce export hubs across the country. With the government aiming to streamline online export shipment from India, this is indeed a welcome step for exporters. The export hubs are expected to act as a centre for favourable business infrastructure and facilities for cross-border e-commerce, including facilitating faster Customs clearance of cargo and also addressing the problem of reimportation because about 25 per cent of goods in e-commerce are reimported. Additionally, the hubs will offer warehousing facilities, processing returns, labelling, product testing, repackaging items, and dedicated logistics infrastructure for connecting to and leveraging the services of nearby logistics hubs, thereby achieving agglomeration benefits for exporters.

E-commerce platforms link local producers even in rural and remote districts with global supply chains. They also resolve market-access issues, which are a significant obstacle hindering exports by micro, small, and medium enterprises (MSMEs). This will particularly help informal businesses and MSMEs that find it convenient to export through digital platforms. In an attempt to leverage e-commerce platforms to support local exporters, manufacturers and MSMEs in reaching potential international buyers, the DGFT signed a memorandum of understanding with global e-commerce firm Amazon last year to offer capacity-building sessions, training, and workshops for MSMEs across districts identified by the DGFT as part of the “District as Exports Hub” initiative. Amazon surpassed $8 billion in cumulative exports from India in 2023 and aims to achieve its ambitious target of $20 billion by next year. Notably, the world’s largest retailer, Walmart, too, surpassed $30 billion in cumulative sourcing from India in more than two decades of operations in the country.

India’s exports through online platforms stood at $8-10 billion last year, compared to China’s staggering figure of more than $300 billion. A key reason for this gap is the cumbersome compliance process associated with exports, especially when it comes to payment reconciliation, which is particularly challenging for new or small exporters. At the same time, global cross-border e-commerce trade was $800 billion. With India’s cross-border e-commerce exports likely to increase to $200 billion over the next six to seven years, it can become a key strategy in achieving the $2 trillion overall exports target by 2030. The Foreign Trade Policy of 2023, which calls for greater focus on emerging areas of export, identifies e-commerce as a focus area for amplifying India’s exports.

Amid rising geopolitical tensions, supply-chain disruption, and global headwinds, India’s export performance has witnessed a slowdown in recent years. India’s services exports increased by only $15.8 billion in 2023-24 over 2022-23, while merchandise exports declined $14 billion in the same period. Overall, India’s combined value of exported goods and services registered a marginal increase of around $2 billion in 2023-24. At a time when export growth remains tepid and the overall trade deficit is around $78 billion, establishing a supportive e-commerce ecosystem can truly give a fillip to India’s export performance. Given the patchwork of rules and export provisions framed for exporters, there is an urgent need for a separate e-commerce export policy, which can ease the compliance burden on exporters.