Draft e-comm policy: Overseas online retailers can't do e-comm without presence in India

In what could be a setback for foreign online retailers in India, the just-released e-commerce policy draft has proposed a mandatory process of registration and presence in the country for overseas e-tailers.

Acknowledging the misuse of gifting route by foreign e-tailers in the past few years, the draft policy has further proposed to ban such parcels and channelise all product shipments through the customs route.

The said changes in rules will impact foreign e-tailers especially Chinese firms such as Shein, AliExpress, Clubfactory and Rowwe, who have been growing their business market share without having offices in India.

In the online fashion business, Chinese platforms have control over more than 5 per cent share, with tier 2 and tier 3 cities contributing for 30 per cent of their sales, as per Redseer study.

The total number of shipments from these e-commerce platforms stands over 1-2 lakh every day. These firms now boast of having a huge user base in India.

Club Factory is ranked among the top e-commerce platforms in India. It claims to have around 60 per cent of its worldwide user base in India and serves over 28k pin codes in the country.

Whereas Shein, which started as selling the western product for women, now has grown three-time in less than a year. Shien app has 50 lakh download in India. It claims to reportedly do over 10,000 orders per day.

Earlier, many small traders and domestic e-tailer bodies including AIOVA have complained against e-tailers from China such as Club Factory, Shein and Aliexpress, who are taking advantage of the exemption from customs duties.

This brings the prices of such goods down and gives them an unfair advantage over sellers on domestic e-commerce marketplaces, traders complaint. Products on these platforms are over 50 per cent cheaper than Indian e-comm sites.

Meanwhile, the 40-page draft document focuses on six broad issues- include data, infrastructure development, e-commerce marketplaces, regulatory issues, stimulating domestic digital economy and export promotion through e-commerce.

The policy called for data to be stored inside the country and for the setting up of more data centers in India. Indian citizens and companies should get the economic benefits from the monetization of data, it outlined.

The e-commerce market in India is expected to grow to $200 billion in the next seven year.

Giant e-tailers such as Amazon and Walmart, who have invested $5 billion and $16 billion respectively in the market, are studying the impact of the draft and soon will come out with their reactions.

For the draft policy, the govt has invited suggestions to be submitted before March 9.