Need for a policy framework dedicated to MSME e-commerce exports in the next foreign trade policy: FISME
Trade, import and export for MSMEs: The industry body for MSMEs, the Federation of Indian Micro, Small and Medium Enterprises (FISME), on Thursday proposed a dedicated policy framework to promote e-commerce exports in the upcoming Foreign Trade Policy (FTP). The suggestion was part of contributions shared by FISME to the government to support MSMEs selling goods online. The current FTP 2015-20 was due to expire on March 31 this year, but has been extended to September 30. The government had previously extended the policy in March 2020 amid the spread of Covid.
“A lot of e-commerce sellers are micro units. However, for these businesses, many of which operate from home and without an office of their own, GST registration is compulsory to sell goods online, while those operating offline with an annual turnover of up to Rs 40 lakh is exempt from GST. So, the new FTP should also exempt e-commerce sellers to incentivize more businesses to log in before they start selling overseas,” said Prashant Patel, President of FISME at Financial Express Online.
FISME also suggested several short- and medium-term measures to address operational inefficiencies faced by MSMEs when exporting through the e-commerce channel. “This includes measures such as simplifying returns in e-commerce exports, digitizing the process of registering the AD code (a 14-digit code provided by the bank and required at the port from which the goods are cleared) , the automation of processes related to eBRC (electronic code Banking certificate of achievement for exporters by the bank as confirmation of payment from the buyer for the exported goods) and eFIRC (electronic certificate of transfer of funds abroad which acts as proof of transfer of funds to India) sourcing and consolidation,” the body said.
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“The GST rebate for export items is applicable on invoices above Rs 25,000, but in e-commerce the goods sold are largely around Rs 10,000 or less, MSMEs still have to pay 18% GST. This 18 p. 100 is a very large amount for small businesses. In addition, MSMEs have to pay import duties on e-commerce returns from foreign countries. We have therefore requested the government to develop a separate policy for e-commerce exports in the next FTP,” Patel added.
Other suggestions made by FISME were the creation of a one stop shop for e-commerce exports by leveraging the existing systems in place like Indian Customs e-Gateway (ICEGATE) etc. Councils’ to raise MSMEs’ awareness of e-commerce exports. ICEGATE is the Indian Customs portal of the Central Board of Excise and Customs (CBIC) that offers e-filing services to commerce, cargo carriers and other trading partners electronically.