New Delhi, India – The value of India's e-commerce exports, which are currently worth $1 billion per year, is expected to rise to $400 billion in the next six to seven years, according to Santosh Kumar Sarangi, director general of international trade. Speaking at a FICCI conference, Sarangi stated that the expected growth in e-commerce exports will help the country attain $2 trillion in goods and services exports by 2030.
He predicted that worldwide cross-border e-commerce, which is currently worth roughly $800 billion per year, will reach $2 trillion by 2030. While India's total merchandise exports are currently at $450 billion per year, China's e-commerce exports alone are $300 billion per year, according to Sarangi. "It shows the potential this sector holds for a country like India where product diversity and innovation is immense, and the ability of our entrepreneurs to gauge the requirements of specific markets and customize their products to cater to these markets is also huge," Sarangi said in a statement.
However, he believes that for India to fulfill its full potential in terms of e-commerce exports, a significant shift in thinking and some regulatory adjustments are required. "The entire orientation for the export ecosystem was modeled on a B2B shipment of goods through air, and ships, which needs to change (to cater to e-commerce exporters)," he said.
The goods trade imbalance in India reached a new high in October, owing to a surge in gold imports during the festival season and a higher oil bill, despite an increase in exports year on year. According to figures from the Ministry of Commerce and Industry, the trade imbalance increased to $31.46 billion last month, with imports totaling $65.03 billion and exports totaling $33.57 billion.
The slowing of the global economy, particularly in the affluent nations of the West, has had an impact on Indian exports. Interest rates in many countries are also rising due to persistent inflation, causing a slowdown in business and commerce. Meanwhile, hostilities in Ukraine and Israel have pushed up oil prices, increasing inflationary pressures.
Speaking on the DGFT's efforts to encourage exports through e-commerce, Sarangi stated that the agency is collaborating with stakeholders such as e-commerce players, other government ministries, the Reserve Bank of India (RBI), and others to resolve various difficulties confronting the sector.
"We (DGFT) are working with the RBI, and Indian Banking Association to streamline the process of export credit availability," Sarangi said in a statement. "In course of time we expect the fintech sector to play a key role in providing innovative and cost-effective payment solutions." The federal government is anticipated to release a comprehensive e-commerce strategy that will challenge the country's e-commerce environment soon.
Commerce Minister Piyush Goyal recently stated in an official statement that the policies and rules were developed after extensive consultation with all stakeholders. Meanwhile, Sarangi stated that e-commerce stakeholders have requested that the Department of Promotion of Industry and Internal Trade (DPIIT) reconsider the FDI policy on inventory-based online trade and exports. While India's FDI policy currently prohibits foreign direct investment in the inventory-based model of e-commerce, it does allow FDI in enterprises operating on a marketplace model.
In terms of the various steps taken by the government to promote e-commerce exports, Sarangi stated that the DGFT is working with relevant stakeholders on issues such as exploring a 'composition levy scheme' for smaller e-commerce players to waive off mandatory GST until they reach a certain scale in exports, working with the RBI and Indian banking association to streamline the process of export credit availability, and striking off payment receivables on returned goods.
He stated that the DGFT is collaborating with the Department of Post to strengthen and develop Dak Niryat Kendras and foreign post offices (FPOs). He also stated that the DGFT is collaborating with postal services in the United States and other nations to establish a full online tracking mechanism for e-commerce export consignments.