NEW DELHI: Commerce minister Piyush Goyal on Thursday said the government is taking a slew of measures to facilitate Indian micro, small and medium enterprises (MSMEs) to reach global markets directly through e-commerce by extending duty remission to them, relaxing payment terms, raising consignment cap, setting up export facilitating post-offices across the country, creating e-exports zones and roping in online marketplaces such as Amazon to handhold them at the district-level.
Citing India’s Foreign Trade Policy (FTP) that envisaged $1 trillion of merchandise exports by 2030, the minister said “e-commerce can become a natural bridge between MSMEs and global market” and help Indian artisans and craftsmen to become entrepreneurs. The new trade policy is effective from April 1, 2023. MSMEs contribute about 30% of the country’s GDP and 40% of its manufacturing. There are over 21 million registered MSMEs under the government’s Udyam portal.
Goyal said the Narendra Modi government works with a “whole of the government approach” with all ministries and departments working in tandem to achieve common goals.
The government has active participation of the Reserve Bank of India (RBI) and departments of revenue, posts, and MSMEs to boost exports through e-commerce. He was speaking after releasing the E-commerce Export Handbook for MSMEs.
The guide prepared by the Directorate General of Foreign Trade (DGFT), will be a “one-stop shop” for MSMEs to know how to promote exports through e-commerce, Goyal said.
The minister said export benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme will be extended to e-commerce exports through post and couriers, which will help MSMEs. The scheme is based on the globally accepted principle that taxes and duties should not be exported, and taxes and levies borne on the exported products should be either exempted or remitted to exporters.
“To enable the MSME sector in getting the RoDTEP benefits, particularly for the exports through e-commerce, the government will be extending the RoDTEP benefits,” Goyal said.
DGFT, an arm of the commerce ministry, will soon set up an IT-enabled mechanism for the same. The scheme has a budget of ₹15,070 crore (2023-24) and about ₹12,000 crore has already been spent.
According to the minister, the move to boost exports via e-commerce will help remotely located artisans and craftsmen to access overseas markets and it will promote exports of Indian food products, spices, handloom, footwear, gem and jewellery, handicraft, Ayush items, pharmaceuticals and leather goods. Collectively, India could get benefits of $1-2 billion of annual exports from MSMEs through this initiative, he said.
Speaking on the occasion, DFFT director general Santosh Kumar Sarangi said all departments such as revenue, post, MSME, DPIIT and RBI are part of the inter-ministerial working group to facilitate exports through e-commerce through various policy measures. “There was a consignment-wise cap on e-commerce exports, which was capped at ₹5 lakh per consignment. After talking to the department of revenue it was raised to ₹10 lakh, and depending on the outcome, it could be made unlimited,” he said.
The department of post has helped link the foreign post offices with the hinterland, he said. They have also opened about 1,000 Dak Ghar Niryat Kendra (Post-Office Export Centres) till November this year to people from the hinterland to come and join the e-commerce bandwagon.
The government is also working with e-commerce players – both domestic and multinational – to conduct a massive outreach campaign across the country. They help in the capacity building of artisans, weavers, handloom manufacturers and other exporters and join e-commerce platforms. In the past, a memorandum of understanding (MoU) was signed with Amazon for 20 districts. The government is in the process of roping in Shiprocket to take this capacity-building programme to 16 more districts. Besides, it is also in talks with Walmart, eBay and a host of other e-commerce players to take up similar capacity-building programmes in different districts, he said.
Sarangi said the government is working with RBI to facilitate policy issues related to foreign exchange realisation. “In normal [case], B2B foreign exchange realisation should happen in 270 days. But e-commerce would require a slightly different ecosystem. So, we are working with RBI to bring in flexibility in this payment realisation,” he said. We are also working with the department of revenue for developing or designating e-commerce export zones where export clearances are facilitated and done very quickly, he added.
India can harness the potential of exports through e-commerce, which is expected to touch the $2 trillion-mark by 2030, he said. The biggest beneficiary of cross-border e-commerce until now has been China, which has taken advantage of this mode to break free from business-to-business (B2B) commerce and directly reach the consumers in overseas markets, he said. It is estimated that China’s cross-border e-commerce is around $300-350 billion, which shows that India has huge potential in this sector, he added.