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Policy changes must to help Indian MSMEs access export markets: Report

21 Jul '24
2 min read
Policy changes must to help Indian MSMEs access export markets: Report
Pic: Adobe Stock

Insights

  • Complex customs procedures, payment repatriation challenges and restrictive policies are key barriers to India's growth in e-commerce, an EY-ASSOCHAM report said.
  • It calls for reducing the cost burden of payment reconciliation, enhancing payment realisation timelines, enabling periodic shipping bill reconciliation and removing 25 per cent variance limitation.
Complex customs procedures, payment repatriation challenges and restrictive policies are significant barriers to India’s growth in e-commerce, according to a report by EY and trade body ASSOCHAM that said policy changes are needed in payments, customs and logistics to help micro, small and medium enterprises (MSMEs) access export markets and achieve the goal.

The report called for extending export promotion incentives to e-commerce exporters under the Courier Import and Export (Electronic Declaration and Processing) Regulations, 2010, to stimulate sector growth.

Amendments to the regulations should include increasing the consignment limit of courier exports to $50,000, creating separate custom supervision codes for cross-border e-commerce to ensure speedy customs clearance, simplifying payment procedures and enabling data collection for policymaking.

India aims to achieve $200-300 billion in e-commerce exports as part of its $1-trillion merchandise export target by fiscal 2029-30. That needs a 50-60 fold rise in current export levels.

The report calls for reducing the cost burden of payment reconciliation, enhancing payment realisation timelines, enabling periodic shipping bill reconciliation and removing 25 per cent variance limitation to enhance financial flexibility for e-commerce exporters, especially MSMEs.

It suggested raising courier consignment limit, streamlining clearance and reverse logistics processes and create customs supervision codes to facilitate faster and efficient handling of e-commerce exports.

Establishing e-commerce export hubs with integrated training centres, introducing regulatory testing sandboxes and extending export incentives to e-commerce exports are some of the report’s other recommendations.

E-commerce exports in India for fiscal 2022-23 were estimated to be worth between $4 billion to $5 billion, accounting for approximately 0.9-1.1 per cent of India’s total merchandise exports, the report noted.

The cost of payment reconciliation should be reduced by levying them as a percentage of consignment value to ease financial burdens on small-scale e-commerce exporters.

Periodic shipping bill reconciliation should be enabled, the 25 per cent variation clause on realised payments should be removed and payment realisation and repatriation periods should be extended up to 18 months aligned with global practices, the report said.

It recommended adding a clarification in foreign direct investment (FDI) policies to allow FDI-funded e-commerce entities to hold inventory for sale in international marketplaces to facilitate global sales of Indian MSME products.

Including e-commerce exports in the central bank’s priority sector lending category will help enhance access to affordable finance, the report added.

Fibre2Fashion News Desk (DS)

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