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India to establish 50 e-commerce export hubs over five years
Industry News- Aug 21,24
In the current financial year, the plan includes the construction of 10 such hubs to accelerate the growth of merchandise exports via online platforms
The Indian government, through the commerce and industry ministry, is planning to establish approximately 50 e-commerce export hubs over the next five years as part of a public-private partnership (PPP) initiative. This move aims to boost the country’s relatively low e-commerce export presence, two sources familiar with the development disclosed.
In the current financial year, the plan includes the construction of 10 such hubs to accelerate the growth of merchandise exports via online platforms. A regulatory framework to support e-commerce exports is expected to be finalised by next month.
India's e-commerce exports currently stand at a modest $5 billion, a stark contrast to China's $300 billion. The new export hub model aims to enhance operational efficiency, minimise logistical challenges, and provide small and medium enterprises (SMEs) with the necessary infrastructure and support to access global markets more effectively.
"The government is finalising plans for these e-commerce export hubs, which were initially announced in the Union budget this July. Key zones for development are being identified, with plans to establish hubs across nearly every state and Union Territory, including the northeastern states," said one of the sources.
The creation of these hubs will require significant upgrades to logistics, large-scale warehousing, and enhanced trade facilitation. These hubs will also enable small producers to sell their products to aggregators who can then identify and secure international markets for them. The hubs are expected to be located in cities with strong road, shipping, and air connectivity.
“This initiative will certainly benefit our MSMEs and other producers, potentially creating jobs. However, it’s essential to focus on product quality to meet global buyer expectations," noted Sanjay Kumar, a former principal commissioner of income tax. He emphasised the importance of alignment among various government agencies and bodies, such as the DGFT, RBI, and CBIC, to ensure the success of the initiative.
The government will provide land, customs clearance, and necessary civil approvals at these export hubs, which will be developed in a ‘plug-and-play’ mode—allowing businesses to begin operations quickly with minimal setup time.
A small e-commerce export hub will require a minimum investment of Rs 40 million, with costs increasing for medium and large hubs.
The proposed regulatory framework is expected to benefit e-commerce platforms and help small producers expand globally by simplifying cross-border e-commerce procedures and reducing barriers for small businesses, according to Siva Balakrishnan, Founder & CEO, Vserve.
India’s e-commerce industry reached a gross merchandise value (GMV) of $60 billion in the fiscal year 2023, marking a 22% increase from the previous year. Projections by the India Brand Equity Foundation (IBEF) suggest the industry could grow to $300 billion by 2030, with third-party logistics providers expected to manage approximately 17 billion shipments within the next seven years.
India has allowed 100% foreign direct investment (FDI) in B2B e-commerce and under the automatic route for the marketplace model of e-commerce.
Queries sent to the commerce ministry’s spokesperson remained unanswered at press time.
(Mint)
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