Customs, banking reforms, incentives at par with China key to boost e-com exports to Rs 29L crore: GTRI

India's e-commerce exports could grow from Rs 41,923 crore to Rs 29,34,400 crore by 2030, thanks to strengths in customised products, traditional crafts, and a growing base of over 1,00,000 sellers.

New Delhi: Reforms in certain customs and banking rules, access to credit, and incentives at par with China will be key for India to boost its exports through e-commerce medium to Rs 29,34,400 crore ($350 billion) by 2030, think tank Global Trade Research Initiative (GTRI) said on Monday.

The Global Trade Research Initiative (GTRI) report also suggested creation of separate regulations and ecosystems to support two different types of e-commerce exports - direct export and overseas warehouse models; supporting firm to open warehouses in key foreign cities; export incentives at par with physical shipments; marketing support; and creation of regional hubs for MSMEs.

"Over 60 per cent of Chinese e-commerce exports (USD 330 billion in 2023) use foreign warehouses for faster delivery. They have special rules and support systems that help their e-commerce sector grow. If we do not adopt similar measures, our e-commerce exports might only reach USD 25 billion by 2030, despite having the potential to reach Rs 29,34,400 crore ($350 billion)," GTRI Founder Ajay Srivastava said.

The global cross-border e-commerce exports are projected to grow from Rs 83,82,400 crore ($1 trillion) in 2023 to Rs 6,70,57,600 crore ($8 trillion) by 2030 on account of the ability of online firms to deliver overseas products to consumers within 1-2 days, matching the speed and convenience of local supplies.

India's e-commerce exports could grow from Rs 41,923 crore ($5 billion) to Rs 29,34,400 crore ($350 billion) by 2030, thanks to strengths in customised products, traditional crafts, and a growing base of over 1,00,000 sellers.

At present, the domestic sector is facing different issues and as successful e-commerce policies in China, Korea, Japan, and Vietnam have helped many firms sell globally, India too needs to publish an e-commerce export policy and these steps.

It said that Indian regulations primarily cater to the direct export model, and separate regulations need to be introduced for meeting the needs of the warehouse model which has several benefits such as over 50 per cent savings in freight, no customs delays, and faster delivery.

Warehouses can be established by the government, private sector, or e-commerce firms and efficient warehouse management including using foreign warehouses will immediately boost India's e-commerce exports, the report said.

Currently, over 60 per cent of China's global cross-border e-commerce exports use overseas warehouses.

Recommending nine customs reforms, Srivastava said that there is a need to set up a green channel for e-commerce shipments; single window system; complete digital submission of documents; and implementation of 24-hour automated inspections.

"Create a dedicated green channel for e-commerce shipments across express, post, air cargo, and ocean cargo channels. This will ensure faster and more efficient clearance for e-commerce exports," the report suggested.

On banking reforms, it said that most banks are not geared to cater to the small packet, low-value e-commerce requiring quick and low-cost processing.

"Key issues include reluctance to process forex through alternative channels, high and multiple processing fees, incorrect allocation of purpose codes, limitations in the RBI's EDPMS (Export Data Processing and Monitoring System), and penalties imposed on exporters for banks' inefficiencies," he said.

It recommended raising the export realization variation limit from 25 per cent to 100 per cent; waiving bank charges and automate processes; define a time limit for banks to complete all small export-related requests; and exempting shipment value up to USD 1,000 per shipment from monitoring till single window is implemented.

It also said that access to credit is a significant challenge for small e-commerce exporters in India and unlike B2B (business to business) exporters, who enjoy multiple financing options due to their priority status with banks, e-commerce exporters face several hurdles.

It added that e-commerce exporters do not receive the same priority status as B2B exporters as they face higher interest rates (12-15 per cent) compared to B2B exporters (7-10 per cent).

"Treat e-commerce exports on par with B2B exports. Include loans for e-commerce exports in priority sector lending. Provide easy credit access as it will allow small firms to expand operations, invest in new inventory, and improve their competitiveness in global markets," Srivastava said.

Further e-commerce export shipments cleared through express courier mode do not get export incentives like Duty Drawback, RoDTEP (Remission of Duties and Taxes on Export Products), export promotion capital goods scheme (EPCG), and advance authorisation, creating a disparity compared to B2B offline exports.

"India should extend existing export incentives to all e-commerce exporters, besides matching the incentive provided by Chinese provinces to e-commerce exporters," he added.