E-commerce Exports and FDI

Context:

The Commerce and Industry Ministry has initiated consultations with stakeholders on boosting e-commerce exports, with MSMEs demanding FDI in the inventory-led model to ease compliance burdens amid rising US tariffs.

E-commerce Export Hubs (ECEHs):

Announced in the Union Budget, the ECEH model seeks to promote India as a global export hub through e-commerce platforms.
Aim: To integrate small and medium enterprises (SMEs) into global value chains.

Inventory-led vs. Marketplace Model:

Inventory-led model: E-commerce entities own goods and sell directly to consumers. FDI currently not allowed.
Marketplace model: E-commerce entities act only as digital intermediaries between buyers and sellers. 100% FDI allowed under the automatic route.
MSMEs are advocating for inventory-led FDI, citing reduced compliance burden and enhanced global competitiveness.

Current E-commerce Export Challenges:

India’s e-commerce exports ? $5 billion, compared to China’s $300 billion.
Rules are fragmented and largely B2B-focused, creating compliance burdens on small exporters.
Dominated by small businesses exporting handicrafts, art, books, garments, gems, and jewellery in the range of $25–$1000.
GTRI projects India’s e-commerce exports can touch $350 billion by 2030 if policies are reformed.