Online sales to foreign buyers gets exports tag

Indian sellers can claim financial benefits under merchandise exports scheme

The government on Tuesday said all sales by Indian sellers to foreign buyers through digital platforms would be classified as export.

All domestic sellers who supply goods and services to foreign buyers would be classified as exporters. It will allow them to claim benefits under the Merchandise Exports from India Scheme (MEIS), which provides financial incentives.

Under the MEIS, the government provides duty benefits at two, three and five per cent, respectively, depending on the products and the destination country.

A notification put out by the Directorate General of Foreign Trade (DGFT) introduced the definition of e-commerce into the Foreign Trade Policy, 2015-2020, which governs the norms for India's international trade.
 

According to the definition, "e-commerce means buying and selling of goods and services including digital products, conducted over digital and electronic network." For the purpose of the MEIS, e-commerce will mean the export of goods hosted on a website accessible through the internet to a purchaser. The dispatch of goods shall be made through courier or post, as specified under the MEIS. The payment for goods purchased on e-commerce platform will be done through international credit or debit cards, according to a Reserve Bank of India circular, the definition adds.

This will help track the sale of e-commerce products and allow the government to monitor the process. Sources in the sector said the move was a precursor to the government opening international markets to domestic e-commerce companies. "Allowing Indian companies to legally engage with foreign markets should be the natural next step," said an official at an e-commerce firm.

Indian e-commerce companies now cannot sell to foreign buyers, though the legality is unclear.

The move could benefit small manufacturers and sellers, who will eligible for the MEIS benefits and can expand their businesses. Problems that would have to be addressed if this comes to pass include sorting out complications in the payment process with regards to various national currencies as well as logistics.

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WIDENING THE MARKET

• The payment for goods purchased on e-commerce platform will be done through international credit or debit cards
   
• The move could benefit small manufacturers and sellers, who will eligible for the MEIS benefits and can expand their businesses
  

 

At present, Indian e-commerce companies cannot sell to foreign buyers, although the legality is unclear
 

Foreign players such as Amazon and Koovs do regular business in India; however, some of these firms have registered subsidiaries in India