28 August 2024, Mumbai
India is preparing a strategic initiative to establish over 50 e-commerce export hubs within the next five years, aiming to significantly boost its e-commerce exports to $100 billion. This ambitious plan involves creating public-private partnerships to build these hubs, with ten slated for development in the current financial year. The government is also finalizing a regulatory framework for e-commerce exports, expected to be ready by next month.
Currently, India's e-commerce exports stand at a modest $5 billion, a stark contrast to China's $300 billion. However, the Indian e-commerce industry is poised for substantial growth. The gross merchandise value (GMV) of Indian e-commerce platforms reached $60 billion in the fiscal year 2023, a 22 per cent increase from previous year. Projections indicate that the industry could reach $300 billion by 2030. What’s more, third-party logistics providers are expected to handle about 17 billion shipments in the next seven years.
China's success can be attributed to several factors, including a robust infrastructure. A well-developed logistics network, efficient customs procedures, and extensive warehousing facilities enable seamless cross-border movement of goods. Favorable government policies, tax incentives, and dedicated export zones have fostered a conducive environment for e-commerce exports. The presence of major players like Alibaba and JD.com, along with a vast network of sellers and suppliers, facilitates large-scale exports. Just like China, countries like the US and the UK also benefit from similar advantages, allowing them to capture a significant share of the global e-commerce export market.
Government initiatives and plans
The government's plan involves setting up e-commerce export hubs in key zones across nearly every state and union territory, including the Northeastern states. These hubs will enhance efficiency, reduce logistical bottlenecks, and provide businesses, particularly small and medium enterprises (SMEs), with the necessary infrastructure and support to access global markets effectively. The hubs will also facilitate small producers selling to aggregators who can then find markets for their products.
The government will provide land, customs clearance facilities, and necessary civil clearances at these export hubs. They will be developed in a plug-and-play mode, minimizing set-up time and allowing businesses to start operations quickly. The minimum investment required for a small e-commerce export hub is Rs crore, doubling for medium-sized hubs and increasing tenfold for large export hubs.
Key features of the plan
• Establishment of 10 hubs in the current financial year.
• Regulatory framework for e-commerce exports expected by next month.
• Focus on enhancing efficiency, reducing logistical bottlenecks, and providing necessary infrastructure.
• Proposed hubs to be set up in cities with strong connectivity.
• Government to provide land, customs clearance facilities, and necessary civil clearances.
• Hubs to be developed in a plug-and-play mode for quick operations.
While the government's initiative is a positive step, challenges remain. These include. Logistics and infrastructure issues, which involves improving last-mile connectivity, warehousing facilities, and customs procedures is crucial for efficient exports. Ensuring products meet international standards and comply with regulations is essential to build trust and gain access to global markets. And a clear and streamlined regulatory environment is needed to facilitate cross-border e-commerce transactions.
Despite these challenges, the potential for growth is immense. With a large and growing internet user base, a thriving domestic e-commerce market, and supportive government policies, India has the opportunity to become a major player in the global e-commerce export landscape.
The establishment of e-commerce export hubs, coupled with a favorable regulatory framework, can significantly boost exports, create jobs, and contribute to India's economic growth. The success of this initiative will depend on effective implementation, collaboration between the government and the private sector, and a focus on quality and compliance.
