New Delhi: With an eye to boost e-commerce exports, the government is considering to lift the present cap of Rs.25,000 on overseas shipments through the e-commerce route once it puts in place an electronic data interchange (EDI) software system to track such transactions.
In the foreign trade policy announced in April, the commerce ministry for the first time provided export incentives to e-commerce exports up to Rs.25,000 through courier services for items such as handloom products, books, leather footwear, toys and customized fashion garments from six ports on a pilot basis. The value of such items shipped through couriers are not captured under regular export data and often categorized as samples. The scheme is operational at airports and post offices of Delhi, Mumbai and Chennai on a pilot basis.
“At present, the revenue department is developing the EDI software on a public private partnership mode with the Express Industry Council of India. Once the software is ready, the e-commerce incentive scheme will be rolled out throughout the country and without any limit on the value,” a government official said, speaking under condition of anonymity.
“Usually, exporters ship it claiming it to be sample and not export because if they have to follow the normal export route, they have to file shipping bill and checks by custom officials which is a cumbersome process for small exporters with small values. The software will do away with the problem,” the official added.
The system will also allow the government to figure out the value of India’s exports through e-commerce. “Present systems fail to capture any such data,” the official said. “Exports of samples which currently include e-commerce exports are subsumed in the others category of exports and it is difficult to separate e-commerce exports on this head.”
The present ceiling of Rs.25,000 does not make sense as e-commerce exporters bring in more foreign currency to the country, according to Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations. “If the government wants to make India a designing hub, such limits should go as high designs can be very expensive,” she said.
India’s e-commerce space is entangled in policy blackholes and lacks regulatory clarity. The commerce ministry is engaged with the online retailers to provide more clarity on foreign investment as well as domestic regulatory issues.
The government is engaged with stakeholder consultations to resolve issues involved with online and offline retail. In a recent consultation with state governments, Bharatiya Janata Party-ruled states such as Rajasthan, Madhya Pradesh and Haryana appealed to the government to follow a pragmatic approach while deciding on foreign investment in retail, including e-commerce, rather than a dogmatic approach.
At present, the government allows 100% FDI in wholesale e-commerce trading but none in retail e-commerce. The government is reluctant to allow FDI in retail e-commerce, fearing it will lead to the backdoor entry of foreign offline supermarket chains.
Once reluctant to negotiate the issue at multilateral forums since its domestic e-commerce policy is not clear on the matter, India has started sending signals that it is ready to make e-commerce part of trade agreements.
In the inter-session meeting of trade ministers belonging to the 16-member regional comprehensive economic partnership at Kuala Lumpur last month, India agreed to the formation of a working group on e-commerce, after initial strong resistance to the move by Japan.
Similarly, reversing its stand against engagement in e-commerce at the BRICS grouping (comprising Brazil, Russia, India, China and South Africa), India agreed to the Framework for BRICS E-commerce Cooperation at a summit in Ufa, Russia, earlier this month.
“We applaud the progress in the implementation of BRICS Trade and Investment Cooperation Framework. We welcome the Framework for BRICS E-commerce Cooperation as an instrument to promote current and future initiatives with an aim to build a closer economic partnership in this sphere. We instruct our ministers to continue to explore ways and means in strengthening our cooperation on e-commerce,” the joint statement of the Ufa declaration read.
Explaining the logic behind India’s changed stance, a government official last month said in an interview that if India doesn’t get into negotiations on e-commerce at international forums at this stage, it will end up losing out. “Right now, we don’t understand how the growth will be. If globally there is so much interest, then you better be there to control the architecture of it. If you don’t join now, then you will be left out. You have to be in control and define the rules of the game,” he had said, requesting anonymity.
However, the official clarified that at this stage, India has only agreed to cooperation and information exchange and will not accept any liberalization commitments in e-commerce.