The Covid-19 pandemic emphasized the significance of digitalization and compelled businesses across various sectors to adopt digital infrastructure for sustainable growth. The “Digital India” programme has played a significant role in driving India’s digital sector and facilitating its exponential growth. With the widespread usage of the internet and mobile devices among consumers, India’s e-commerce sector has experienced rapid expansion in recent years and is projected to reach USD 350 billion by 2030.
India’s micro, small & medium enterprises (MSME) have a direct connection with the progress of the e-commerce sector in terms of financing and supportive technologies. To support the growing demand of the e-commerce sector, from time to time, the Indian government promotes various policies such as in B2B e-commerce the whole ball of wax is allowed. Furthermore, in the e-commerce marketplace model, 100% FDI is permitted through automatic route.
By looking at the current trends, the government of India is looking forward to promoting the cross-border trade in Digital Economy and e-commerce through exports. India’s new Foreign Trade Policy 2023 has increased the cap for E-Commerce exports through courier from ₹5 Lakh to ₹10 Lakh. The current foreign trade policy will also promote the automatic approval of various permissions which will result in reduced processing times and immediate approval of applications for exporters under the automatic route.
By providing online approval, the time required for issuance of advance authorization and EPCG will be reduced from 3 to 7 days to just one day. Additionally, the processing time for re-validation of authorization and extension of export obligation period will also be significantly reduced from a span of 3 days to a month to just one day. In addition to the already paperless application process for issuance, all authorization redemption applications will also be made paperless. This will result in the entire lifecycle of the authorization becoming completely paperless. The implementation of technology and streamlined processes will be allowed for online approvals without the need for physical interaction. This initiative will be beneficial for 55-60% of exporters who are MSMEs.
The existing foreign trade policy dictates that all FTP benefits should be extended to e-commerce exports. To achieve this, the government is currently working on implementing necessary IT systems in the Department of Commerce, Postal Service, and CBIC within the next six months. Furthermore, guidelines are being developed in consultation with other Ministries to streamline e-commerce export facilitation and enable more exports under e-commerce.
In line with the new foreign trade policy, special outreach and training activities will be conducted to handhold small e-commerce exporters through industry and knowledge partners. Additionally, the value limit for exports through courier has been increased to Rs. 10,00,000 per consignment. Furthermore, it also outlines the roadmap for establishing E-Commerce Export Hubs (ECEH) to create a sustainable export business atmosphere and facilitate cross-border trade related activities such as payment reconciliation, returns policy, export entitlements, and others.
This policy has had a significant impact on international trade, enabling businesses to expand their reach, reduce costs, and improve efficiency. Digitalization will enable businesses to optimize their supply chains, reducing costs, and improving efficiency. Supply chain management systems that utilize digital technology enable businesses to monitor inventory, track shipments, and manage logistics in real-time, which enhances productivity and reduces waste.
Digitalization will facilitate the trade by reducing paperwork, enhancing transparency, and streamlining customs procedures. The use of digital trade documents and digital signatures has simplified the processing of trade documents, reducing the time and cost of conducting cross-border trade. At the same time, digitalization will help businesses to gather and analyse data on consumer behaviour, market trends, and supply chain performance. This data can inform decision-making and help businesses make strategic decisions about entering new markets, expanding product lines, and optimizing their operations.
In addition to the above, an escalation in India’s digital literacy programme has led to a wave of investments in e-commerce businesses that benefit the market for new players establishing their bases and developing supportable business models. All of these would certainly benefit India to become a vital trade hub at the global level. Then, it would also help in boosting the position of Indian Rupee (₹) as a global currency for trading goods and services.
Moinak Maiti is an author and independent researcher based in Kolkata.
Pravin Jadhav is a faculty at IITRAM Ahmedabad.