Solving Customs, Payments and Logistics Issues Is Key to Stronger E-Commerce Exports – Maritime Gateway

The Indian government is targeting e-commerce exports worth $200-300 billion by fiscal 2030 as part of an overall merchandise export target of $1 trillion, which requires a 50-60 times increase in current export levels.

Complex customs procedures, repatriation challenges and restrictive policies pose significant barriers. Changes in payment, customs and logistics policies are necessary to help SMEs access export markets and achieve their goals.

Reducing the burden of payment reconciliation costs, shortening payment processing times, enabling periodic shipping bill reconciliation and removing the 25% variance cap to increase financial flexibility for e-commerce exporters, especially SMEs

Increase courier shipment limits, streamline customs clearance and reverse logistics processes, and create customs supervision codes to speed up and streamline e-commerce export processing.

Establishment of e-commerce export centers with integrated training centers, introduction of regulatory testing environments, extension of export incentives for e-commerce exports.

India’s e-commerce exports in fiscal 2023 are estimated to be worth US$4-5 billion, which is around 0.9% to 1.1% of India’s total merchandise exports, according to a latest report by leading professional services firm EY in association with ASSOCHAM titled ‘Enabling e-commerce exports from India’. The report suggests that adopting more flexible policies and addressing existing challenges in customs, payments and logistics could help boost e-commerce exports and achieve the government’s target of US$200-300 billion by fiscal 2030. Key recommendations include creating separate customs control codes for e-commerce exports and increasing the consignment limit for courier exports. The report further highlights facilitating re-imports, removing the limit on deviations from settled payments and extending the revenue realisation timeline. Other suggestions include clearly defining the responsibilities of exporters and sellers, extending export incentives to e-commerce exports and effectively implementing e-commerce export hubs.

“In today’s global marketplace, the need for improved regulations and policies to support e-commerce exports cannot be overemphasized. The recommendations in this report are essential to empowering Indian e-commerce exporters and ensuring their competitive position in the global arena,” said Deepak Sood, Secretary General, ASSOCHAM.

Reflecting on the report’s findings, Bipin Sapra, Partner, Tax, EY India, said, “The Indian e-commerce export ecosystem is poised for exponential growth in the coming years, which will benefit the economy in general and SMEs in particular. The government and other regulators need to take a cue from other developed e-commerce export markets to address the shortcomings in the current laws and processes to help SMEs access global markets efficiently and easily. This report provides all the recommendations needed to build a thriving e-commerce export ecosystem in India.”

Recommendations for reforming Indian laws and regulations to achieve exponential growth in e-commerce exports include simplification of customs procedures, enabling robust payment reconciliation and settlement mechanisms, and various policy interventions.

Customs and regulatory reforms:

To boost e-commerce exports, amendments have been proposed in the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, which include increasing the courier export shipment limit to USD 50,000. Creation of separate customs supervision codes for cross-border e-commerce trade to ensure speedy customs clearance, simplify payment procedures and enable data collection for policy making. Reduction in customs clearance time for courier shipments by incorporating certain functionalities in CSB-V and collaborating with e-commerce marketplace for verification. Laying down clear guidelines for re-import transactions to enable duty-free re-import of shipments up to USD 600 and for shipments above this threshold, formulation of SOPs to recognise returns as re-import of returned goods.

Payment reconciliation:

Recommendations include reducing payment reconciliation costs by charging them as a percentage of the shipment value to ease the financial burden on small-scale e-commerce exporters. Allowing periodic reconciliation of shipping bills and removing the 25% variance clause for processed payments, and extending payment and repatriation periods to 18 months in line with global practices. Redefining the responsibilities of sellers and e-commerce operators to streamline processes and reduce the administrative burden on exporters.

Political interventions:

The EY – ASSOCHAM report calls for extension of export promotion incentives to e-commerce exporters under the Courier Import and Export Regulations, 2010 to stimulate the growth of the sector. Expanding the scope of e-commerce export centres (ECEH) by providing customs support through stationing a customs officer at these ECEHs, training support through development of integrated training centres and logistic support by developing such ECEHs near air cargo terminals. In particular, adding a clarification in the FDI policy to allow FDI-funded e-commerce entities to have inventory for sale in international markets to facilitate global sale of products of Indian SMEs. Establishing a regulatory testing sandbox for e-commerce exports to encourage innovation and compliance testing. Further, including e-commerce exports in the RBI’s priority sector lending category to increase access to affordable finance. Granting AEO-T3 status to e-commerce platforms to streamline customs procedures while including cross-border e-commerce provisions in bilateral agreements to enhance India’s e-commerce export opportunities globally.