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E-Commerce Export Framework
Context: India’s e-commerce industry is dominated by small businesses exporting products valued between $25 and $1,000 including items such as handicrafts, art, books, ready-made garments, and gems and jewelry.
E-commerce:
- E-commerce, short for “electronic commerce,” is the process of buying and selling products or services online through digital devices or platforms like online stores, smartphones, marketplaces, or social media.
Potential and Regulatory Developments for India’s E-commerce Exports:
- India’s e-commerce exports have the potential to reach $350 billion by 2030, according to the Global Trade Research Initiative (GTRI).
- This can position India as the 3rd largest online retail market globally.
- Between 2019 and 2026, number of online shoppers in India is expected to reach:
- 88 million in rural areas (Compound annual growth rate (CAGR) of 22%)
- 263 million in urban areas (CAGR of 15%).
- It is due to the swift expansion of e-commerce in tier-2 and tier-3 cities. India’s e-commerce exports have the potential to grow at a faster pace than its IT exports did in the early 2000s. However, current e-commerce exports from India are $5 billion, whereas China’s exports have reached $300 billion.
- The Commerce Ministry is developing a regulatory framework to enhance e-commerce exports.
- It will set up export hubs near airports and ports for streamlined export operations.
- These hubs, acting as bonded zones, aim to simplify e-commerce cargo movements and address the challenge of re-imports, which constitute approx. 25% of e-commerce goods.
Challenges faced by E-commerce:
- Current e-commerce export regulations, designed for traditional B2B exporters, create compliance challenges for small businesses.
- GTRI recommends a separate e-commerce export policy.
- Similar policies in China, Korea, Japan, and Vietnam have successfully helped firms sell globally.
- Counterfeit and substandard goods on popular e-commerce platforms in India undermine consumer trust.
- The sector depends on internet connectivity, but the digital divide limits its full potential.
- Poor logistics cause delays and higher shipping costs due to a lack of supply chain integration.
- E-commerce industry faces technological disruptions, AI advancements, and cybersecurity threats such as:
- Data breaches, hacking, and phishing leading customers to hesitate to use credit cards due to rising fraud risks.
Government Initiatives for the E-Commerce Sector
- National E-Commerce Policy: This policy covers six key aspects of the e-commerce ecosystem:
- Data management, infrastructure development, e-commerce platforms, regulatory concerns, boosting the domestic digital economy, and promoting exports via e-commerce.
- Open Network for Digital Commerce (ONDC)
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- 100% FDI is permitted in B2B e-commerce, and the marketplace model of e-commerce, 100% FDI is allowed under the automatic route.
- The Consumer Protection (e-commerce) Rules, 2020