Govt looks to boost e-commerce exports, will set up PPP hubs along lines of Southeast Asian countries

• The Finance Minister announced the setting up of e-commerce export hubs across the country in public private partnership (PPP) mode along the lines of several Southeast Asian countries that are benefiting from the rapid growth of e-commerce exports.

Highlights:

• While Micro, Small and Medium Enterprises (MSMEs) and artisans in China, South Korea, Japan and Vietnam have witnessed a surge of exports through e-commerce, India’s exports through this route, at $5 billion, have only been a fraction of its total goods exports of $450 billion.
• In contrast, China’s exports through this medium alone have crossed $300 billion.
• The step comes at a time when Indian goods exports are facing several disruptions due to external shocks emanating from the Russia-Ukraine war, the Red Sea crisis and container shortages due to growing trade tensions between US and China. Goods exports during the last financial year had slipped by 5 per cent.
• “To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-PPP mode. These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof,”.
• The Commerce and Industry Ministry in its Foreign Trade Policy (FTP) released last year had increased the consignment-wise cap on e-commerce exports through courier from Rs 5 lakh to Rs 10 lakh. The ministry had said that e-commerce export potential in the range of $200 to $300 billion by 2030.
• India’s e-commerce industry is primarily dominated by small businesses that export products valued between $25 and $1,000 and popular items include handicrafts, art, books, ready-made garments, gems and jewellery. As per think tank Global Trade Research Initiative (GTRI), exports from the segment have the potential to grow at a faster pace than its IT exports did in the early 2000s.
• “India’s current e-commerce export provisions are a patchwork of rules framed for regular business-to-business (B2B) exporters. This creates an enormous compliance burden on small firms, and India needs to address all such issues in one place. To address such needs, the report recommends that the Indian government issue a separate e-commerce export policy,” the GTRI report said.
• While growth of Southeast Asia’s e-commerce market has accelerated since the mid-2010s, the COVID-19 pandemic has propelled it into a new phase, “From 2016 to 2021, the total value of e-commerce sales grew fivefold, or 40 percent, annually. And e-commerce’s share of all retail sales surged to 20 percent, from 5 percent,”.

Prelims Takeaway

• E-Commerce
• GTRI