The commerce ministry is in discussions with the Reserve Bank of India (RBI) to facilitate e-commerce exports by liberalising the Foreign Exchange Management Act (FEMA) guidelines, Santosh Kumar Sarangi, Director General of Foreign Trade (DGFT) said on Thursday.
“A few days back we had a meeting with the entire team of RBI officials who deal with this. There is a lot of liberalisation which is coming in the RBI guidelines and we should be seeing the results in next two to three months with regard to ecommerce (export) policies,” Sarangi said at the 1st Asia Pacific e-commerce policy summit organised by economic think tank ICRIER.
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Sarangi said that for business to business (B2B) shipments, the RBI has a FEMA guideline under which payments have to be realised within a certain period of time (nine months). “But in commerce that time may get expanded,” Sarangi said, indicating that the commerce department is working with the RBI to liberalise the guideline for ecommerce exports.
For any export realisation, FEMA guidelines also suggest that the realisation has to be knocked off against the shipping bill. “That’s done through generation of an Electronic Bank Realisation Certificate (e-BRC). DGFT’s team is working with RBI so that this e-BRC is done through a self-declaration basis. This will help exporters who have a large number of consignments with small values. They will be able to do it themselves without approaching a bank. So that would result in a lot of ease of doing business for e-commerce players,” Sarangi said.
At present, e-BRC is uploaded on the DGFT system by banks on realisation of payment against exports. Any firm applying for benefits under Foreign Trade policy is required to furnish e-BRC as a proof of realisation of payment against exports made.
Sarangi said that apart from the RBI, the commerce department is working with the Department of Revenue and the Department of Post to expedite ecommerce exports. “Designating zones where accountability and responsibility is inbuilt, and clearing consignments at a very fast pace would be crucial.
Along with that, sufficient warehousing within and abroad, and meeting the consumer demand on a real-time basis would also be key. So we are working with the Department of Revenue, Department of Post, and with a lot of private stakeholders to work on a range of policies which impact ecommerce,” he added.
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The DGFT said most of India’s trade laws and trade regulations were designed for B2B shipment of goods and requires a tremendous mindset change on the part of regulators to understand the changing landscape of exports where a supplier based in India can connect directly with a consumer outside.
“In commerce, 20 per cent of the goods are returned. The way our trade regulations are designed, returns of goods have to go through a lot of scrutiny. So how do you ensure the return of ecommerce goods which are of small value but high frequency also have an easier return system within our country,” he said.
India is targeting to increase ecommerce exports to $200 billion by 2030 from $8-10 billion at present. The government has targeted to increase overall exports to $2 trillion by 2030.
“Currently, ecommerce exports are in the range of $8-10 billion, including goods shipped from India and made available on overseas ecommerce platforms. But it is way off the mark compared to some of the larger economies. China does anything above $300 billion of ecommerce exports (annually). That shows us the kind of gap that exists in the ecommerce space presently and the immense potential that India has in ecommerce exports,” Sarangi said.
Separately, on Thursday, DGFT partnered with the global logistics service provider, DHL, by signing a Memorandum of Understanding (MoU) that will cover 76 districts in three phases to conduct capacity-building sessions, training, and workshops for making Indian MSMEs export-ready. “Out of more than 800 districts, only 62 districts account for 80 per cent of India’s exports. If we give a fillip to ecommerce exports and involve many other districts where export outreach and export integration is not very robust, then India has the potential to improve its exports,” Sarangi added.