Given the absence of a clear path to boost exports through traditional methods and anticipated geo-economic changes disrupting manufacturing and distribution across the world, India must prioritize e-commerce exports.
Currently, India’s annual e-commerce exports are in a range of $4-5 billion, with the government striving to increase this to $250-300 billion by 2030. This growth target represents 43-50% of India’s merchandise export growth aspirations.
Achieving this requires collaboration among the government, state governments, Reserve Bank of India, e-commerce platforms and service providers to empower Indian micro, small and medium-sized enterprises (MSMEs) to compete globally.
Despite a global trade slowdown, e-commerce continues to expand at a 9% annual rate; its size as a market is projected to reach $8.1 trillion and capture 47% of worldwide retail sales by 2026. China leads in e-commerce in terms of market size, followed by the US, UK, EU, Japan and South Korea. India’s domestic e-commerce market is valued at $70 billion and forecast to reach $325 billion by 2030.
However, a significant portion of products sold on global e-commerce platforms are Chinese-made and sold by third-party sellers. In 2023, China’s e-commerce exports were estimated at $300-350 billion. According to Marketplace Pulse, Chinese sellers comprise 50% of the top sellers on Amazon.com. Amazon even acknowledged its heavy reliance on Chinese sellers, suppliers and marketing budgets in a regulatory filing.
Additionally, platforms like TikTok Shop, Shein and Temu allow Chinese sellers to sell directly in international markets, bypassing Amazon, Walmart and eBay. While China progresses up the e-commerce exports value chain from ‘Made in China’ to ‘Marketed by China,’ India’s e-commerce exports lag behind.
Since the early 2000s, the Chinese government has fostered an enabling policy environment, establishing cross-border e-commerce pilot zones in over 100 cities. For millions of Chinese sellers, these zones offer seamless customs, taxation, forex, financing and transportation services under one roof for millions of sellers.
China’s customs procedures not only provide an efficient green channel for e-commerce exports, but also simplify international customer returns, a critical feature of e-commerce. China has also streamlined processes for foreign remittances and regulatory compliance.
It also actively promotes Chinese brands and soft power to address perception issues and stimulate global demand. While China’s e-commerce growth is driven by focused government support, it is powered by a smooth seller and manufacturer experience.
In contrast, India’s e-commerce journey has suffered from inadequate policy support. Before the 2023 Foreign Trade Policy, which included a chapter on e-commerce exports, e-commerce exports received minimal attention. Even now, the extant export rules favour low-volume, high-value business-to-business (B2B) conventional exports over low-value, high-volume business-to-customer (B2C) e-commerce exports.
For example, an Indian e-commerce exporter who sells a product at $50 could earn a gross profit of $10-15. However, like B2B exports, she must spend ₹1,000-2,000 to complete the RBI-mandated EDPMS closure, incurring a net loss. Other challenges include: a) customs clearance taking 1-6 days compared to under 24 hours in China; b) a consignment limit of $12,000 versus China’s $50,000; and c) having to write off international customer returns, which account for 15-25% of sales.
To enhance India’s export competitiveness, the government must prioritize e-commerce exports as a key element of its 100-day agenda. This requires revising the Foreign Trade Policy, eliminating EDPMS closure charges for e-commerce exports and implementing bold reforms across payment reconciliation, customs clearance, customer returns and compliance burden.
Establishing rules for e-commerce export hubs and setting up 25 such hubs over the next five years are crucial steps. State governments must formulate dedicated policies, invest in infrastructure and provide financial incentives to early-stage e-commerce exporters. Accessible credit financing, insurance, bill discounting and factoring services must be made available to such exporters.
Ending the prohibition on FDI-funded e-commerce marketplaces from holding inventory would boost e-commerce exports. It would spur innovative e-commerce export models, enable e-commerce export adoption among MSMEs and engender contract manufacturing on a larger scale.
India’s strong brand image and demand for its products abroad, combined with cost advantages, position it potentially as a global e-commerce export hub across labour-intensive sectors such as Ayurvedic products, furniture, toys, apparel, kitchenware, and home décor.
E-commerce exports will mean millions of sellers from any corner of India selling to customers in every corner of the world; an Indian seller on Amazon and eBay could sell in 200 countries. This also aligns with China-de-risking strategies pursued by several multinational corporations and advanced economies.
E-commerce exports will create millions of jobs in India’s semi-urban and rural areas, thereby geographically expanding the sweep of economic gains. Through timely and focused implementation of the required reforms, e-commerce exports can become a real economic growth enabler. However, this begins with the government recognizing exports not just as an economic opportunity, but as a national imperative.