Govt Seals Pact With Amazon For MSME Export Boost, Other E-Commerce Giants In Line

In a recent development, Santosh Sarangi, the Director General of Foreign Trade (DGFT), has announced the signing of a memorandum of understanding (MoU) with Amazon to bolster e-commerce exports originating from India. Sarangi revealed ongoing discussions with retail giants Walmart and Flipkart for similar agreements, aimed at propelling e-commerce exports from approximately 100 districts across the nation.

Advocating for increased collaborations between prominent Indian enterprises and Micro, Small, and Medium Enterprises (MSMEs) to enhance the latter's business prospects, Sarangi drew attention to successful models employed by major Japanese and Korean corporations. These companies have established systematic programs, engaging in partnerships with MSMEs as part of comprehensive vendor development initiatives.

According to the MoU, Amazon and DGFT will co-create capacity building sessions, training and workshops for MSMEs in districts identified by the DGFT as part of the District as Exports Hub initiative outlined in the Foreign Trade Policy 2023, in a phased manner.

Geographical Diversification Of Exports

Highlighting the surge in exports of Samsung and Apple phones alongside an overall uptick in electronic product exports from India, Sarangi emphasized the imperative to diversify exports geographically. Currently, a mere four states—Gujarat, Maharashtra, Karnataka, and Tamil Nadu—contribute to a substantial 68 per cent of India's total exports.

Underscoring the pivotal role of free trade agreements (FTAs) in fostering trade opportunities, Sarangi pointed out that India has already concluded FTAs with Australia, Mauritius, and the United Arab Emirates. Ongoing negotiations involve potential agreements with the United Kingdom, Peru, the Gulf Cooperation Council (GCC), and Eurasian countries. This strategic approach aims to expand India's global trade footprint and amplify economic cooperation with key international partners.

FDI In Inventory-Based E-Commerce

Meanwhile, Sarangi also informed that the government is actively considering the industry's request to permit foreign direct investment (FDI) in inventory-based e-commerce for exports. Currently, e-commerce platforms with foreign direct investment are restricted to operating solely as marketplaces and are prohibited from maintaining their own inventories.

Sarangi noted that stakeholders in the e-commerce sector have approached the Department for Promotion of Industry and Internal Trade (DPIIT) to reevaluate the FDI policy on this matter. The industry is seeking a rule change to facilitate inventory-based e-commerce for export purposes.

“Revisiting these rules could pave the way for the establishment of e-commerce export zones, a concept the government has been actively working on. The aim is to align regulations with the evolving needs of the industry and foster growth in the e-commerce export sector,” emphasized Sarangi.

In response to challenges faced by e-commerce exporters in accessing benefits like duty drawbacks and government schemes, the government is actively collaborating with Express Cargo Clearance Systems (ECCS) and leveraging postal bills of exports. This initiative aims to ensure that shipping bills seamlessly align with existing schemes, including the Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL). The government is also working on a mechanism to enable exporters utilizing e-commerce platforms to claim export incentives efficiently.

Conclusion

As the government contemplates revisiting FDI rules and embraces cutting-edge solutions for streamlined exports, India is positioning itself at the forefront of the evolving global digital economy. With a focus on innovation, collaboration, and regulatory adaptability, the nation is paving the way for a dynamic and flourishing e-commerce sector in the years to come.