Industry players are rallying for a paradigm shift in the foreign direct investment (FDI) landscape, specifically urging the inclusion of inventory-based ecommerce platforms involved in exporting goods. The Director General of Foreign Trade (DGFT), Santosh Kumar Sarangi, disclosed that ecommerce platforms have approached the Department for the Promotion of Industry and Internal Trade (DPIIT) with requests to reevaluate the FDI policy.
As it stands, the current policy restricts FDI to ecommerce platforms operating on a marketplace model, excluding inventory-based entities from such investments. Sarangi affirmed that the DGFT is actively engaged in multiple initiatives, including exploring the concept of creating ecommerce export zones to bolster exports through online commerce.
Sarangi stated, “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.”
Simultaneously, efforts are underway to provide warehousing facilities and swift packaging clearance services from these proposed ecommerce export zones. Sarangi acknowledged the existing policy challenges, particularly in terms of the export-oriented unit (EOU) model, traditionally reserved for manufacturing. The DGFT is diligently working to establish a modified EOU model tailored to ecommerce exports, emphasizing processing and packaging rather than manufacturing.
“The possibility that our people will be able to sell their own brand to the entire globe using an 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,” Sarangi explained.
Highlighting the government’s commitment to promoting ecommerce exports, Sarangi mentioned collaborative efforts with the Department of Revenue to conceptualize a scheme similar to the ‘composition levy scheme.’ This initiative aims to waive off GST for smaller players until a certain threshold export value is reached.
Furthermore, the DGFT is actively working to ensure 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), effectively reach the intended beneficiaries.
To streamline ecommerce exports, the DGFT has joined forces with the Department of Post, planning to establish more than 1,000 Dak Niryat Kendras operating on a hub-and-spoke model. This initiative aims to facilitate quick custom clearance and streamline exports for ecommerce players.
On a global scale, the DGFT is collaborating with postal services of multiple countries to develop a comprehensive online tracking mechanism for ecommerce export consignments.
Looking ahead, the DGFT is exploring partnerships with private players to promote ecommerce exports and enhance awareness. An upcoming initiative involves signing an MoU with Amazon to pilot a program training ecommerce exporters in 20 districts. Similar proposals are in the works with Flipkart, Walmart, and discussions with players such as eBay are underway to extend the trial to more districts.
Sarangi expressed optimism about India’s ecommerce sector driving both goods and services exports to a market size of $2 trillion by 2030, aligning with the ambitious growth plans outlined by leading ecommerce platforms.
