E-commerce exports still finding its footing

India’s e-commerce exports, particularly in the business-to-consumer (B2C) segment, remain a small fraction of the global market, far behind leaders like China and Vietnam. Despite a promising rise in demand for niche products such as artificial jewelry and textiles, the country’s mass-market penetration is still in its early stages. Akshay Ghulati, CEO of Shiprocket International Shipping, attributes this lag to complex export regulations and the fragmented ecosystem supporting Indian exporters.

The domestic e-commerce market stands at $83 billion as on FY22, which is expected to reach $150 billion by FY26. Meanwhile, for e-commerce exports the Indian government has set a target to the tune of $200 to $300 billion by FY30, out of the total merchandise export target of $1 trillion. To realise this, there is a requirement of a 50-60 fold increase in current export levels, as per a EY-ASSOCHAM report.

“India’s B2C e-commerce exports have immense potential but are constrained by the complexity of supply chain requirements and compliance issues,” says Ghulati. He highlights that Indian sellers often face higher costs and longer lead times compared to their global counterparts, making international sales less competitive.

Structural complexities hindering growth

For Indian exporters, navigating the intricacies of compliance is a major hurdle. Currently, businesses must handle multiple layers of regulation and engage with multiple service providers to fulfill requirements like generating shipping bills and reconciling payments.

“For a single $30 shipment, small merchants may earn a mere $10 profit, but they have to complete numerous compliance steps, which can be time-intensive and costly,” says Ghulati.

The report points out that MSMEs struggle with complicated customs processes, challenges in payment repatriation, and restrictive regulations, which act as major obstacles. It calls for policy reforms in areas like payments, customs, and logistics to make it easier for MSMEs to enter export markets and reach the set targets.

He emphasises the need for a unified digital system to streamline compliance, comparing it to the relatively seamless operations of Chinese and Vietnamese exporters. “A single portal integrating all compliance requirements would be transformative for SMB exporters,” he says.

E-commerce hubs: A potential game-changer

The introduction of e-commerce export hubs, part of a draft government policy, aims to simplify the export process. These hubs would centralise inventory storage, compliance requirements, and logistics, drastically reducing the time and costs associated with cross-border e-commerce. “The idea is to complete compliance processes in advance at these hubs, which would make life easier for exporters,” Ghulati explains.

However, he acknowledges that the policy is in its nascent stages and will require adjustments to cater to the unique needs of Indian SMBs. “For instance, expecting SMBs to stock three months of inventory at these hubs may strain their working capital,” he points out, advocating for a more flexible, just-in-time inventory model.

A lack of awareness about vertical marketplaces and demand generation strategies is another obstacle for Indian exporters. While platforms like Amazon and Etsy dominate, Ghulati stresses the importance of diversifying sales channels. “Many exporters are unaware of niche marketplaces specialising in categories like furniture or jewellery, which could yield better results,” he says.

Shiprocket is working to address this gap with its LaunchX product, designed to provide exporters with market insights and knowledge.

In a bid to diversify, Indian exporters are increasingly targeting non-traditional markets like Australia and the Middle East, where demand for Indian products is growing significantly. While the U.S., U.K., and Europe remain dominant export destinations, there has been a shift in focus. Year-on-year, there is a notable rise in exports to the GCC region and Australia.

Exporters are also tailoring their offerings to meet regional preferences. For instance, artificial jewellery popular in the U.S. may differ in style from what is sought in Australia. “Indian sellers are becoming adept at analysing market trends and adjusting their product catalogs to cater to specific consumer demands,” says Ghulati.

To unlock its potential in global e-commerce, India must address systemic challenges in supply chain management, compliance, and market access. Policies such as the introduction of export hubs and de minimise exemptions for low-value shipments represent positive steps, but their implementation will be key.

The report suggests implementing more flexible policies and addressing concerns related to customs, payments, and logistics to drive e-commerce exports could help meet the government’s $200-300 billion target by FY 2030.

“The infrastructure is being built, but it’s just the beginning. If we can streamline processes and provide better enablement, India’s e-commerce exports could truly take off,” says Ghulati. As these developments unfold, the coming years will determine whether India can transition from niche player to a significant force in the global e-commerce landscape.