Industry Bats For FDI In Inventory-Based Ecommerce Platforms

Industry stakeholders have reportedly pitched the centre to permit foreign direct investment (FDI) in inventory-based ecommerce platforms involved in exporting goods. 

As per news agency PTI, Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said that the Department for the Promotion of Industry and Internal Trade (DPIIT) has indeed received requests from ecommerce platforms for relook at the FDI policy on the matter. 

From the current policy perspective, FDI is only permissible in ecommerce platforms that operate on a marketplace model and is barred for inventory-based ecommerce entities.  

Sarangi said that DGFT was actively working on several steps, adding that it was exploring the idea of the creation of ecommerce export zones to promote exports via ecommerce.

“For export purposes, if these (rules) could be revisited is something that we are requesting the DPIIT to examine and explore… and this could be one step forward for creating the ecommerce export zones that DGFT and its team has been working on,” Sarangi was quoted as saying.

Alongside, work is also underway to offer warehousing facilities and quick packaging clearance services from these ecommerce export zones. 

“But the present policy ecosystem does not support creation of this because the export-oriented unit (EOU) model is exclusively for manufacturing. But here we are talking of a facility which is not exactly manufacturing but a little bit of processing and packaging,” he added.

As per Sarangi, DGFT is working on building this EOU model focussed on ecommerce exports from scratch and is hopeful of convincing the Department of Revenue about the feasibility of this new avenue. 

“The possibility that our people will be able to sell their own brand to the entire globe using ecommerce platform is something which would require a lot of mindset change…So we are working with the DoR, RBI, and the DPIIT to see how this mindset change can come,” he said.

Touting various steps taken by the government to promote ecommerce exports, he said that the DGFT was working with the Department of Revenue to conceptualise an initiative on the lines of ‘composition levy scheme’ to waive off GST for smaller players until a certain threshold export value. 

Sarangi also noted that authorities were working to ensure benefits and incentives accorded by the centre such as duty drawback, Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL) reach the end applicants. 

The DGFT has also reportedly partnered with the Department of Post to strengthen and expand Dak Niryat Kendras and foreign post offices (FPOs) to streamline ecommerce exports. Sarangi noted that more than 1,000 such Kendras are in the offing and would operate on a hub and spoke model to ensure quick custom clearance and streamlined exports for ecommerce players. 

Globally, the department is also working with postal services of multiple countries to build a full stack online tracking mechanism for the ecommerce export consignments. 

DGFT is also said to be mulling joining hands with private players to promote ecommerce exports and raise awareness. Citing examples, Sarangi said that it will soon sign an MoU with Amazon to pilot an initiative which will train ecommerce exporters in 20 districts. 

He also said that the department was working on a similar proposal with Flipkart and Walmart. It is also in talks with players such as eBay to roll out the trial to more districts. 

Meanwhile, Sarangi expects India’s ecommerce sector to fuel the growth of both goods and services exports from India to a market size of $2 Tn by 2030. The comments came hours after a senior Amazon executive said that the ecommerce platform plans to ramp up exports out of India to $20 Bn by 2025. 

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.