With e-commerce exports standing at a meagre $2 billion, comprising less than 0.5 per cent of India's total exports valued at $447.46 billion in the fiscal year 2022–2023, there exists significant room for development. Predictions suggest that global e-commerce exports will surge to $2 trillion by 2025. India could aspire to secure a noteworthy portion of this expansive market, setting a goal between $200 billion to $250 billion by the year 2030.
A thorough e-Commerce Export policy must be developed and put into effect to realise this ambitious goal. The policy framework needs to thoughtfully tackle the distinct obstacles that Small and Medium Enterprises (SMEs) facing export-related operations must overcome.
Developing a customised export strategy for e-commerce requires careful analysis of the obstacles facing small- and medium-sized exporters. Logistical limitations, regulatory impediments, and access to foreign markets are a few examples of these problems. India can provide a conducive atmosphere that promotes the expansion and competitiveness of small and medium-sized enterprises (SMEs) in the e-commerce export industry by methodically tackling these obstacles.
It is crucial that policymakers take a forward-thinking stance going ahead and adjust the policy to the changing dynamics of the world trade scene. Accepting digitization, expediting customs processes, and encouraging creativity may all help to make India's export e-commerce ecosystem more robust and efficient.
Challenges Faced by Small & Medium Enterprises in E-commerce Exports
Shipping Costs
Small and Medium-Sized Businesses (SMEs) frequently face the difficulty of bearing the high shipping costs related to both product transportation and customs clearance. This financial strain could severely reduce their profit margins and weaken their position as market leaders.
The formidable cost implications arise from the intricate processes involved in transporting goods from one location to another. Whether it be domestic or international shipments, SMEs find themselves contending with the financial strain of freight charges, which includes the complexities of customs clearance procedures. These expenses not only pose a financial obstacle but also introduce a logistical challenge that demands careful navigation.
To address this challenge, SMEs need to explore strategic approaches to optimise their shipping and customs clearance processes. This could involve negotiating favourable terms with logistics partners, leveraging technology to streamline documentation processes, or exploring collaborative initiatives within the industry to collectively address the issue of high shipping costs.
Collection of Payments
Small and Medium Enterprises (SMEs) often encounter significant expenses when utilising payment gateways or aggregators to facilitate the collection of sales proceeds from international customers. The fees imposed by these platforms can be notably high, posing a financial challenge for these businesses. Additionally, SMEs find themselves burdened by the necessity to submit physical documents at Authorised Dealer Banks for the regularisation of their export bills. As a result, the combined challenges of high payment gateway charges and the need for physical document submissions contribute to the financial strain experienced by SMEs engaged in international transactions.
Trade Barriers
Small and medium-sized enterprises (SMEs) encounter a myriad of challenges when venturing into international markets, contending with a spectrum of trade barriers and regulatory impediments. These obstacles encompass tariffs, quotas, stringent standards, mandatory certifications, and licensing requirements, collectively posing formidable hurdles. Navigating through these intricacies not only extends the temporal and financial investments associated with exporting but also exerts an impact on the calibre and volume of the goods being traded.
The complexities SMEs face in foreign markets are multifaceted, involving intricate negotiations and compliance processes. Tariffs, which act as taxes on imports and exports, alongside quotas dictating quantity restrictions, add layers of intricacy to the export landscape. Moreover, the demand for adherence to rigorous standards, coupled with obligatory certifications and licensing protocols, further amplifies the challenges. This intricate web of trade barriers not only extends the time and resources invested in the exporting process but also influences the ultimate quality and quantity of products reaching international markets.
Why Do We Need a Comprehensive E-commerce Policy?
Addressing a spectrum of crucial issues including market access, foreign direct investment, taxation, consumer protection, data privacy, and intellectual property is pivotal in fostering a landscape of fair competition for both domestic and foreign players in the e-commerce realm. This comprehensive approach extends to online and offline retailers alike, ensuring equal opportunities.
It necessitates articulating India’s stance on global e-commerce matters such as cross-border data flows, digital trade facilitation, and taxation, aligning the nation with international frameworks to leverage the benefits of the digital economy. Facilitating India's active participation in the global e-commerce landscape necessitates robust financial, technical, and legal backing. The EPCG License allows Indian exporters to import capital goods for pre-production, production, and post-production at concessional customs duty rates.
Complementing these measures, the establishment of comprehensive data protection legislation becomes paramount. This legal framework should meticulously oversee all facets of personal data operations undertaken by e-commerce entities, encompassing data gathering, processing, storage, transfer, disclosure, and deletion. Such a framework is instrumental in ensuring the privacy and security of both Indian citizens' online data and that of businesses.
Conclusion
India is in a prime position to benefit from the enormous potential of exporting goods and services over the Internet. With a meagre $2 billion contribution to total exports, there is immense room for growth, especially considering the projected $2 trillion global e-commerce export market by 2025. However, to achieve this ambitious goal of $200-250 billion by 2030, a carefully crafted e-commerce export policy is imperative.
The challenges faced by Small and Medium Enterprises (SMEs) in this domain, such as high shipping costs, payment collection expenses, and trade barriers, necessitate strategic solutions. Optimising shipping processes, negotiating favourable terms with logistics partners, and leveraging technology to streamline documentation can mitigate financial strains. Similarly, addressing the high fees associated with payment gateways and streamlining document submissions at Authorised Dealer Banks are key aspects to support SMEs in international transactions.
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