DGFT defines eCommerce for Merchandise Export India Scheme

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Customer Care No. 91-11-45562222
DGFT defines e-Commerce for Merchandise Export
India Scheme
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• 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 Trade Policy 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.

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• 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.

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• 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.

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• 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.
• Over the last couple of years, e-commerce has
  changed consumer experience. E-commerce companies
  are redefining how customers buy and
  manufacturers sell subsequently, today even a
  street hawker can approach a global audience of
  buyers. E-commerce companies compete with
  conventional consumer goods companies in
  attracting customers to their sites.
• "Prima facie, the Union of India/ State
  Government cannot, on the one hand, for the
  purpose of tax, treat such sales as retail and on
  the other hand, for the purpose of investment,
  not treat the same as retail sale".
• This statement by the Hon'ble Justice Rajiv Sahai
  Endlaw, while dealing with the petition by the
  All India Footwear Manufacturers and Retailers
  Association (AIFMRA) for seeking the clarity on
  FDI norms for Online Market, created confusion
  around the e-commerce market and FDI Policy in
  India3.
• There has been a never ending debate going on
  with respect to the e-commerce space in India.
  The e-commerce players are exempt from various
  taxes and hence have an edge over the traditional
  sellers. However, various states have now started
  imposing entry tax on the e-commerce player like
  Gujarat and Uttarakhand etc.

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• Introduction of e-commerce definition for MEIS
• Under the MEIS, the government provides duty
  benefits at 2 per cent, 3 per cent and 5 per
  cent, depending upon the products and country.
  With the increasing use of internet across the
  globe, large amount of trade is also conducted
  through online platforms. The online players
  which have been so far trading in goods exports
  were deprived of the benefits of export
  incentives under this scheme as e-commerce had
  not been defined in the FTP 2015-20. The
  definition will now cover a wide range of online
  exporters under the ambit of this scheme.
• The Ministry of Commerce Industry, vide Notifica
  tion No. 2/2015-204 has introduced the following
  definition of e-commerce.
• "'e-commerce' means buying and selling of goods
  and services, including digital products,
  conducted over digital and electronic network.
  For the purposes of Merchandise Exports from
  India Scheme (MEIS) e-commerce shall mean the
  export of goods hosted on a website accessible
  through the internet to a purchaser. While the
  dispatch of goods shall be made through courier
  or postal mode, as specified under the MEIS the
  payment for the goods purchased on e- commerce
  platform shall be done through international
  credit/debit cards and as per the Reserve Bank of
  India Circular (RBI/2015-16/185) A.P. (DIR
  Series) Circular No. 16 dated September 24, 2015
  as amended from time to time."
•  

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