How Modi government plans to boost exports for India's SMEs
What's the story
The Indian government is set to revamp its e-commerce export policy, a move aimed at helping small and medium enterprises (SMEs) enter global markets. The government will start talks with industry stakeholders on an inventory-based model for the e-commerce exports. This would be a major shift from the current foreign direct investment (FDI) norms that prevent marketplaces like Amazon and Flipkart from holding inventory, The Times of India reported.
Potential impact
Balancing act for policymakers
The proposed framework could offer long-term stability to Indian exporters looking for consistency in international markets. However, the challenge for policymakers will be to strike a balance between regulatory protections and reducing entry barriers for small firms. For businesses, this could pave the way toward a more predictable route to global customers.
Trade challenges
US's duty-free import provision scrapped
The talks come at a crucial time as the US has scrapped a provision allowing duty-free import of small parcels worth up to $800. This has hit Indian exporters who heavily depend on low-value shipments. In light of this, New Delhi is under pressure to ease barriers and create more export opportunities for smaller sellers.
Consultation session
Consultation on '3rd-party export facilitation model'
A meeting called by the Directorate General of Foreign Trade (DGFT) on September 15, will see representatives from Amazon, Walmart, logistics companies, and government departments together. The consultation will focus on a "third-party export facilitation model." Under this system, a dedicated export entity linked to e-commerce platforms would handle compliance, logistics and customs procedures.
Market statistics
Less than 10% MSMEs sell overseas via e-commerce
Despite the boom in domestic online sales, fewer than 10% of micro, small and medium enterprises (MSMEs) sell overseas through e-commerce channels. High logistics costs, complex paperwork, and compliance requirements continue to limit participation. Research shows that almost 87% of enterprises that entered e-commerce exports between 2020-2024 had exited by 2025.
Regulatory changes
Proposed model may require DPIIT guideline amendments
The proposed inventory model, if approved, could require amendments to the Department for Promotion of Industry and Internal Trade's (DPIIT) current guidelines. These rules currently prohibit foreign-owned marketplaces from directly owning the goods for sale. However, officials maintain that this planned inventory model, limited to exports, would not change the government's overall position on FDI in retail.