Establishment of e-commerce export hubs

Source- This post on the Establishment of e-commerce export hubs has been created based on the article “Govt looks to boost e-commerce exports, will set up PPP hubs along lines of Southeast Asian countries” published in “Indian Express” on 24 July 2024.

Finance Minister Nirmala Sitharaman announced the establishment of e-commerce export hubs across the country in public-private partnership (PPP) mode during the Union Budget presentation.

These hubs will be modeled after successful Southeast Asian countries benefiting from e-commerce export growth.

Current Export Challenges

i) Indian goods exports are facing disruptions due to external shocks such as the Russia-Ukraine war, the Red Sea crisis, and container shortages stemming from US-China trade tensions.

ii) Indian goods exports declined by 5% last financial year.

MSMEs and Artisan Support:

i) The initiative aims to enable Micro, Small, and Medium Enterprises (MSMEs) and traditional artisans to sell their products in international markets.

ii) The hubs will offer a seamless regulatory and logistic framework to facilitate trade and export-related services under one roof.

Comparison with Other Countries

i) While MSMEs and artisans in China, South Korea, Japan, and Vietnam have seen significant export growth through e-commerce, India’s e-commerce exports stand at $5 billion, a small fraction of its total goods exports of $450 billion.

ii) In contrast, China’s e-commerce exports have surpassed $300 billion.

Policy Enhancements

i) The Commerce and Industry Ministry’s Foreign Trade Policy (FTP) increased the consignment-wise cap on e-commerce exports through courier from ₹5 lakh to ₹10 lakh.

ii) The ministry projects e-commerce export potential of $200 to $300 billion by 2030.

Industry Potential

i)  India’s e-commerce industry is dominated by small businesses exporting items valued between $25 and $1,000, including handicrafts, art, books, ready-made garments, gems, and jewellery.

ii) According to the Global Trade Research Initiative (GTRI), this segment has the potential to grow faster than IT exports did in the early 2000s.

Need for Separate E-Commerce Export Policy

i) Current e-commerce export provisions in India are a patchwork of rules designed for regular B2B exporters, creating compliance burdens for small firms.

ii) The GTRI report recommends a separate e-commerce export policy to address these issues comprehensively.

Southeast Asia’s E-Commerce Growth

i) McKinsey & Company reported that Southeast Asia’s e-commerce market has accelerated since the mid-2010s, further propelled by the COVID-19 pandemic.

ii) From 2016 to 2021, the total value of e-commerce sales in Southeast Asia grew fivefold, or 40% annually, with e-commerce’s share of all retail sales surging from 5% to 20%.

UPSC Syllabus: Indian Economy