DGFT defines e-Commerce for Merchandise Export India Scheme

Background

The Foreign Trade Policy of India embarks a structure and environment for uplifting the export of goods and services. It is designed to lay emphasis on generation of employment and increasing value addition in the country to align its objectives with the "Make in India" vision of our Hon'ble Prime Minister. The government has considered extending its support to both the manufacturing and services sector, with special emphasis on improving "Ease of Doing Business in India".

The Foreign TradePolicy 2015-20¹ (hereinafter called as "FTP 2015-20"), introduced 2 new schemes for promoting exports in India. The main objective behind introducing the new schemes was to provide reward to exporters to offset infrastructural inefficiencies and associated costs involved and also to provide exporters a level playing field.

These schemes are as follows-

a.

Merchandise Exports from India Scheme (MEIS) -

♦		This is a scheme for the export of certain specified goods to specified markets and aims at reducing the costs involved in export of goods/products which are produced/manufactured in India, especially those which pose high export intensity and employment potential to enhance India's export competitiveness.
♦		The notified goods and notified markets have been described in Appendix 3B of the FTP 2015-20.

b.

Services Exports from India Scheme (SEIS) -

♦		This scheme is a substitute for a number of schemes launched earlier, with different conditions for eligibility and usage and aims at boosting up the exports of notified services.
♦		The notified services and rates of rewards are listed in Appendix 3D of the FTP 2015-20.

Introduction

The World Trade Organization (WTO) defines e-commerce² as the production, distribution, marketing, sale or delivery of goods and services by electronic means.

Generally, e-commerce means goods and services crossing borders electronically. Broadly speaking, e-commerce is the sale or purchase of goods or services provided over internet or other computer networks. An e-commerce transaction can be between enterprises, households, individuals, governments and other public or private organizations."

For the first time under the FTP 2015-20, the Ministry of Commerce& Industry added e-commerce exports to the export subsidy regime. Under the scheme, e-commerce exports through postal and courier services of up to Rs.25,000/- for items such as handlooms, books, leather footwear, toys and customized fashion garments and shipped from Delhi, Mumbai and Chennai airports are eligible to receive incentives under the MEIS.

At present, the consolidated FDI policy defines e-commerce as, the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.

After the Ministry of Commerce & Industry provided incentive to e-commerce trade under the FTP 2015-20, revenue department hadkept its watch dogs after the ministry asking them to define what e-commerce is; as it was not defined under the FTP. At that instance, the ministry was only looking at bookings through the electronic medium and shipments through couriers, but DIPP had proposed to enlarge the definition of e-commerce. Also many states were coming up with their own definitions of e-commerce so it was a dire need of the hour to define the term at the central level to remove ambiguities.