Online sellers seek FDI in inventory-based model

New Delhi: The e-commerce industry has suggested the government permit foreign direct investment (FDI) in inventory-based model of online trade only for export purposes, a senior government official said on Friday.

At present, the country's FDI policy does not permit foreign direct investment in the inventory-based model of e-commerce. It is allowed only in firms that are operating through a marketplace model. Director General of Foreign Trade (DGF) Santosh Kumar Sarangi said that they are working on several steps to promote exports through e-commerce medium. He said that the e-commerce stakeholders have asked the department for the promotion of industry and internal trade (DPIIT) to relook at the FDI policy on this issue. "For export purposes, if these (rules) could be revisited is something that we are requesting the DPIIT to examine and explore... and this could be one step forward for creating the e-commerce export zones that DGFT and its team has been working on," Sarangi said here at a conference on e-commerce exports. Talking about steps they are working on to promote exports through e-commerce medium, he said many of these exporters even the smaller ones are subjected to a mandatory GST regime, so the directorate is working with the Department of Revenue (doR) to see if there could be a scheme like 'composition levy scheme' for smaller players so that this mandatory GST could be waived till they attain a certain threshold of export value. "Similarly, exports through e-commerce many a time are not getting benefits like duty drawback or DGFT schemes like Remission of Duties and Taxes on Exported Products (RoDTEP) or Rebate of State and Central Taxes and Levies (RoSCTL). So we are now working with Express Cargo Clearance Systems (ECCS) and postal bill of exports to ensure that the shipping bills flow directly so that these kinds of exports also get covered under these kinds of schemes," he said. He added that the DGFT is also working with the Department of Post to ensure that Dak Niryat Kendras and foreign post offices (FPOs) get strengthened and expanded. The Department of Post has the objective to open 1,000 such Kendras which will work on a hub and spoke model with the FPOs and they are trying to ensure that the export consignments are reached at the quickest possible time, get the customs clearance and are sent abroad. The department is working with the US Postal services as well as postal services of other countries to provide a full online tracking mechanism for the e-commerce export consignments, he added. Further Sarangi said that providing warehousing facilities as well as quick packaging clearance facilities from e-commerce export zones is one of the top priorities.