CROSS BORDER E-COMMERCE
A catalyst to propel exports Dr. K. Rangarajan feels that with certain degree of confidence and certainty, Indian entrepreneurs can certainly leverage cross border e-commerce effectively.
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ross border trade is unquestionably a field of great potential nowadays, particularly post-pandemic. The moot point, however, is whether India can tap it in a manner that is commensurate with its scale and potential. Though the government has come out with a draft policy that is going through multiple revisions, synchronized participation of the mediating players will be important. In any kind of an international transaction, the central bank, customs, and logistics players are involved. In cross-border e-commerce, one more key component involved is the platform. If a proper ecosystem is not being dictated or prescribed, then individuals may find that big players like Amazon and others are trying to shape it to their advantage. And that can be disadvantageous for a country like India. Due to the COVID pandemic, lots of smaller players, especially SMEs, started coming together and using digital platforms for reaching out to consumers. Exchange, digital signature, digital transactions, realization in money, and the element of trust, are some of the points to be considered when looking at SMEs. As far as India is concerned, the more saleable products in overseas market are those of labour intensive unorganized sectors or traditional SME products like leather, handicrafts, food products, apparels and gems and jewellery. The focus has to shift towards converting some of these traditional exports to cross-border exports and leveraging e-commerce as is being done in the domestic market. Branding is a challenge for SMES. To resolve this, country branding has to be the first step, rather than individual firms doing their branding. This is going to be a huge task. We may definitely
Dr K. Rangarajan Professor & Head, Center for MSME Studies, IIFT Kolkata
have individual success stories. But those are exceptions and the effort should be on country branding, as most of our export basket belongs to small and medium enterprises. One suggestion is organising more e-fairs, which allow products to be showcased on a 3D plane. Most developing countries have started doing this and the gems and jewellery sector has already had success. The government should strive to create a kind of brand equity among buyers, which platforms like Amazon have successfully done. Decentralization can help accelerate this process. State governments are willing to incentivize facilitation centers to be set up in their states. As long as these facilitation centers are decentralized and dispersed in terms of ownership, it won’t be a problem. If big players grab these opportunities, then probably the platform will dictate the transaction rather than importers and exporters having a fair play in it. The free return policy is in place in the domestic import-export
market, but in foreign transactions, there is no clarity or proper definition for return policies. If an international customer wants to return the product, what should be done? What will be the cost to bring it back and who will bear it? The moment these loose ends are tied up, we’ll find accelerating growth. Another area of concern is the compliance certification. The parties in e-commerce exports should be comfortable understanding e-transactions, e-payment, e-signatures, e-shipping and other digital solutions. This can affect cost competitiveness, when business owners are looking at people to educate them about these factors. The regulatory framework has to be improved upon. When multimodal transportation comes into play, the level of integration in India is not satisfactory. It is not possible to travel with a single logistics document, which is accepted by every authority, inside or outside of India. A separate logistics department has been set up to work on this. Foreign exchange, customs, duty and credit in international returns (and whether there can be any incentives to cover these costs), data security, validity and legality of transactions are some practical problems associated with e-commerce, which need some protocols to adhere to. Having a single window to address and channelize these issues can help. There is no doubt that crossborder e-commerce can play a key role in achievement of India’s US$ 1 trillion export vision. A really careful deliberation is required during policy framing. The unprecedented growth of e-commerce in the domestic market is proof that once there is a certain level of confidence, there will be no stopping Indian entrepreneurs from entering global markets.
Apr-May, 2022 • India Business & Trade | 29
