Partnership between DGFT and private players key to success of Export Hubs: FIRST India

The Forum for Internet Retailers, Sellers & Traders (FIRST India) hosted a stakeholder roundtable with key officials from the Directorate General of Foreign Trade (DGFT), emphasizing the need to establish over 100 export hubs to tackle key challenges faced by Indian MSMEs in international trade. The discussion highlighted cross-border payment issues, complex customs procedures, and restrictive export policies as major barriers to global expansion.

Participants agreed that fast-tracking the establishment of E-commerce Export Hubs (ECEHs) would support the global ambitions of Indian MSMEs by streamlining processes and enabling sellers to navigate international markets more efficiently.

The gathering reaffirmed the need to set a goal of establishing 100 export hubs and contribute to the country’s larger objective of $1 trillion in overall exports. Currently, commerce exports amount to just $4-5 billion, representing a mere 0.9%-1.1% of India’s total merchandise exports in FY23. To meet the government’s target of $200-300 billion in e-commerce exports, participants emphasized the need to multiply current export levels by 50 to 60 times.

Speaking at the event, Moin Afaque, Joint DGFT, said, “The Directorate General of Foreign Trade (DGFT) remains committed to fostering collaboration and establishing transparent, accessible systems for the benefit of the entire trade ecosystem and for capacity building and skill development for promotion of exports. Initiatives such as the Trade Connect Portal and Exim Pathshala are designed to empower and educate stakeholders across the spectrum. We invite leading industry players to collaborate with us in developing educational content on critical topics, including logistics, warehousing, packaging and labeling, to extend the nationwide outreach and create a meaningful impact. I express our gratitude to the India SME Forum for organising a productive workshop. The insightful ideas shared, particularly on capacity building for E-Commerce Exports, incentives and technology interventions, have been invaluable, and we look forward to exploring these concepts to further enhance our cross-border e-commerce capabilities.”

Vinod Kumar, Trustee - FIRST India and Hon. President, India SME Forum stated, “E-commerce presents a unique opportunity for MSMEs to access global markets and we believe India can easily cross a US $ 200 Billion Cross Border Export Target by 2030. However, we need to address the existing challenges around payments and customs that are hindering this growth. Through initiatives like E-commerce Export Hubs, we are working closely with the government and partners to create a conducive ecosystem for MSMEs to thrive in global trade.”

Earlier this year, the government announced that it plans to establish E-commerce Export Hubs (ECEHs) to streamline and boost e-commerce exports, particularly for MSMEs. This initiative aims to tackle key challenges by simplifying cross-border transactions, reducing compliance burdens, and driving growth in international markets.

The Directorate General of Foreign Trade (DGFT) has been collaborating with platforms like Amazon and DHL to boost MSME exports through the "District as Export Hubs" initiative. In the recent months, DGFT signed MoUs with DHL to train MSMEs across 76 districts and with Amazon to provide export training in 20 districts. Logistics firm Shiprocket has also signed MoUs with DGFT to set up a capacity-building programme across 16 districts. These partnerships focus on capacity building and workshops to make Indian MSMEs export ready.

Key recommendations:

· 25% Variance Cap on Payment:

o Payments reduced by less than 25% should be considered settled immediately by banks.

o For reductions over 25%, banks must follow a write-off process based on exporters’ documents justifying the variance. The process should be reviewed quarterly or semi-annually.

· Time Allowed for Payment Realization:

o E-commerce exporters should be given a 9-month period for payment realization and document submission.

· Aggregate Reconciliation Model:

o The reconciliation model should be annual or semi-annual to reduce compliance burdens, saving time and costs for high-volume industries.

o For already outstanding shipping bills, a quarterly aggregate reconciliation should be allowed without the 25% variance cap.

· E-Commerce Export Policy Framework:

o Provisions for small-value bills should be simplified and directly reported to the EDPMS.

o Policies should ease the re-import process, exempt returned items from duties, and provide refunds for items re-entering India, reducing financial burdens for small sellers.