Safeguarding small sellers in the e-comm space

Source: The post “Safeguarding small sellers in the e-comm space” has been created based on “Safeguarding small sellers in the e-comm space” published in “Indian Express” on 25th August 2026.

UPSC Syllabus: GS 2- International Relations

Context: India is increasingly using cross-border e-commerce to connect small producers, artisans and MSMEs with global consumers. The DGFT Notification 27/2026-27 and Public Notice No. 25/2026-27, issued on August 5, 2026, operationalise the Inventory-based Cross-Border E-Commerce Facilitation Framework while introducing safeguards for small sellers.

Key concerns for small sellers

• Large e-commerce intermediaries may gain excessive control over pricing, customer ownership and market information.
• Small producers may become dependent on intermediaries without knowing the final overseas sale price or consumer demand.
• MSMEs may also face risks related to unfair deductions, returns, discounts, damaged inventory and rejection of goods.
• There are concerns regarding unauthorised rebranding, copying of designs and misuse of trademarks.

Major safeguards introduced by DGFT

1. Clear distinction between participants
   1. The framework distinguishes between the Exporter-on-Record (EOR), who manages exports and inventory, and the Seller-on-Record (SOR), whose goods are procured for export.
   2. This recognises that the logistical exporter and the actual producer need not be the same entity.
2. Greater transparency
   1. The EOR must maintain a digital repository connecting procurement records, GST invoices and export documents with individual sellers.
   2. Sellers must receive information on the final overseas sale price, order status, shipment tracking and destination country.
3. Access to export benefits
   1. Seller-attributable export benefits must reach the SOR.
   2. The administrative charge retained by the EOR cannot exceed 10% of export rebates and refunds, and attributable benefits must be transferred within 30 days of receipt.
4. Accountability and compliance
   1. Independent compliance certification and preservation of records for five years strengthen transparency and accountability.
5. Dispute resolution
   1. Sellers can approach the concerned DGFT Regional Authority for dispute resolution.
   2. The existing rights of micro and small enterprises under the MSMED Act, including access to the MSE Facilitation Council, remain unaffected.

Measures to further strengthen the framework

1. A model EOR-SOR agreement should be developed for micro and small enterprises, clearly specifying procurement prices, commissions, deductions, returns, discounts and damaged inventory.
2. Retrospective price reductions or deductions should generally be prohibited after goods have been accepted into export inventory.
3. Sellers should receive a simple digital dashboard containing information on exports, destinations, realised prices, returns, discounts and export benefits.
4. Stronger protection should be provided for Indian brands, trademarks, handicrafts, handlooms and GI products against unauthorised rebranding and copying.
5. The framework should balance seller protection with the legitimate costs and returns of EORs, which provide warehousing, technology, logistics, marketing, fulfilment and global market access.

Way Forward

1. India should aim for a partnership-based e-commerce ecosystem rather than excessive regulation.
2. The EOR should earn through logistics, technology, fulfilment and market access, while the SOR should retain timely payments, export benefits, brand protection and access to market information.
3. The pilot phase should be used to improve the framework and ensure that e-commerce becomes shared export infrastructure for MSMEs.

Conclusion: The success of the framework should not be measured merely by the volume of exports through e-commerce warehouses. Its real success will lie in enabling Indian micro and small enterprises to become stronger, more profitable and globally competitive without surrendering their economic identity.

Question: The inventory-based cross-border e-commerce model can expand India’s export potential, but may also create risks for small sellers. Discuss the safeguards introduced by DGFT and suggest measures to further protect MSMEs.

Source: Business Line