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Prime Minister’s vision for enabling US$ 400 billion worth of merchandise exports in the current fiscal year needs the e-commerce chapter in FTP

India’s economic landscape is currently on the road to recovery catalysed by continuous growth and transformation of the MSME sector. It has been rightly identified by the Hon’ble Prime Minister and the Union Commerce Minister that exports will be a key pillar for India’s economic recovery and subsequent growth in a post Covid-19 landscape. Foreign Trade Policy (FTP), the basic framework of policy and strategy for promoting exports and trade, will therefore, assume paramount importance in helping lay the foundation for exports that will enable India to expand international markets for Indian products.

The existing policy caters largely to traditional, offline, and B2B exports. Increased use of B2C e-commerce exports will allow MSMEs to compete with products and services offered by foreign competitors. E-commerce has already demonstrated immense potential in enabling exporters to reach foreign customers more effectively by taking advantage of pre-established infrastructure and robust supply chain. As more consumer-facing Indian businesses go through a process of digitisation, Indian MSMEs can reap significant financial benefits and create export-driven growth. Therefore, it is important to enable a conducive policy that promotes e-commerce as a channel of exports for MSMEs and lowers entry barriers for them.

Given the unique business model of e-commerce entities, it is critical for the Foreign Trade Policy 2021-2026 to play an active role in helping local products gain access to international markets through e-commerce. In this regard, experts have put together specific suggestions that should be integrated into a specific chapter on e-commerce exports:

  • Increase awareness around e-commerce exports
  •  Implement end-to-end digitisation for exports related processes
  •  Develop specialized logistics capabilities for e-commerce exports
  •  Simplify compliance and regulatory requirements for e-commerce exports and
  • Create long term capabilities to support the growth of e-commerce exports

FTP should create dedicated e-commerce export zones by leveraging existing Special Economic Zones (SEZs). We need to develop specialised low cost and trackable logistics solutions by using channels like India Post, and extend benefits of schemes like Market Access Initiative (MAI) to e-commerce exporters. Speaking on this, Dr. Aruna Sharma IAS, Former Secretary, Govt. of India, stressed, “The need of the hour is to focus on a chapter dedicated to end to end digitalisation, increase awareness and logistic capabilities, and promote expansion opportunities for MSMEs. This will add to the growth rate of the economy and create sustainable jobs. The FTP should be revisited with the objective to develop exports. Any itch in the policy that acts as a hindrance must be removed.”

Alka Arora, Joint Secretary, Ministry of Micro, Small and Medium Enterprises, Govt. of India was of the opinion, “The current times require a need for a global market intelligence system to provide an overview of the market positions of various countries and their policies as a way to offer free of cost information to the MSMEs. Amazon’s success is also based on the data which gives us a hint of the importance of such a platform. We are working with various councils to help MSMEs become exporters by providing them the required certifications.”

Vinod Kumar, President, India SME Forum said, “MSMEs in India currently account for about half of the country’s exports while contributing to over one third of India’s GDP today. Accessibility to hassle-free cross border trade will give small businesses the accessibility to global markets and scalability to attain exponential growth. If the country has to deliver the vision of hon’ble PM and expand the international markets for Indian products then it can happen only if we use e-commerce in the FTP. Hence it is our humble submission.”

As India gradually moves to attain the Government of India’s vision for an Aatmanirbhar Bharat, the success of MSMEs and the sector’s contribution to exports will play a significant role in the direction of becoming an economic self-reliant country. It is, therefore, the need of the hour to re-engineer foreign trade policies for the acceleration of trade across the country.

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