EY-Assocham report advocates raising e-commerce export ceiling to $50,000

The report said to enhance global competitiveness of exporters and offset the cost disabilities, govt should introduce a special credit package with fiscal incentives for the e-commerce export sector

India should increase the consignment limit of a courier exported through the e-commerce channel to $50,000 (around Rs 41 lakh) from the current limit of $12,000 (Rs 10 lakh), Ernst & Young (EY) and Associated Chambers of Commerce and Industry of India (Assocham) said in a report.

“Due to increasing e-commerce operations, this limit is now insufficient. E-commerce exports exceeding $12,000 are mandated to follow the cargo mode, leading to longer clearance and delivery times due to increased scrutiny,” the report titled ‘Enabling E-Commerce Exports from India’ said.

The report also advocated extending the export promotion schemes to e-commerce exports to allow courier exporters to claim all export promotion incentives. It also urged states to come up with their own state-wise e-commerce export policy by identifying the districts to set up E-Commerce Export Hubs (ECEHs), identifying the products to create manufacturing clusters, expanding the scope of ECEHs by integrating training centres within ECEHs and facilitating development of ECEHs in or near air cargo terminals, with a custom official stationed there to clear shipments for exports.

 

“Moving forward, the government should endeavour to include cross-border e-commerce trade as a separate provision in all bilateral dealings with other countries to boost India’s e-commerce exports,” the report added.

The report said to enhance the global competitiveness of the exporters and offset the cost disabilities, the government of India should introduce a special credit package with fiscal incentives for the e-commerce export sector. “Moreover, access to cheaper finance should also be enabled by including e-commerce exports under the priority sector lending category of the Reserve Bank of India (RBI),” it added.

Current RBI guidelines mandate that the seller receive export proceeds in convertible foreign exchange within nine months of the export shipment. The report said this may not always be feasible for exports made through e-commerce platforms in certain situations. “Flexibility needs to be provided by either removing the said time limit or extending the same up to 18 months for exports made through e-commerce mode following the guidelines,” the report explained. Furthermore, the report suggested redefining the responsibility of the seller and the e-commerce operator by letting the seller concentrate on producing goods for export and the e-commerce operator shoulder the entire responsibility regarding regulatory compliances and payment conciliation.

Bipin Sapra, Tax Partner, EY India, said, “The government and other regulators need to take cues from other developed e-commerce export markets to iron out the kinks in the current law and processes to help the MSMEs gain access to global markets efficiently and easily.”

The report said India’s share in the global e-commerce market is roughly 1.5 per cent at present, which is projected to remain below 2 per cent for the foreseeable future.

The global B2C e-commerce market is expected to grow from $5.7 trillion in 2022 to $8.1 trillion by 2026 at a Compound Annual Growth Rate (CAGR) of 9.1 per cent, the report said. Meanwhile, India’s B2C e-commerce market was valued at $83 billion and is expected to reach $150 billion by 2026 growing at a CAGR of 15.9 per cent.