The Government of India, through its Ministry of Commerce & Industry and Department of Commerce, issued a new trade notice numbered 26/2023-24-DGFT dated 4th September 2023. The notice aims to provide clarification on the availability of pre-shipment and post-shipment export credit, as well as Packing Credit in Foreign Currency (PCFC), for E-commerce exports. This move comes in line with the new Foreign Trade Policy 2023, specifically targeting Chapter 9 that focuses on ‘Promoting Cross Border Trade in Digital Economy’.
Background: The government has been conducting consultations with various stakeholders including industry representatives, exporters, and nodal departments to address outstanding issues related to e-commerce exports. One of the primary concerns raised was the lack of financial support in the form of export credits for E-commerce exports.
Consultation with RBI: Upon consultation with the Reserve Bank of India (RBI), it was made clear that existing guidelines already allow for such export credits under the “Master Circular-Rupee / Foreign Currency Export Credit and Customer Service to Exporters.” These guidelines are comprehensive and do not exclude e-commerce exporters from obtaining pre-shipment and post-shipment export credit, as well as PCFC.
Implications for E-commerce Exporters: The notice is essentially an encouragement for banking and financial institutions to extend these credits to e-commerce exporters. Financial institutions are expected to offer these facilities based on extant guidelines issued by the RBI.
- Financial Access: This clarifies the path for e-commerce businesses to access necessary funds for exporting goods or services, enhancing their competitiveness in global markets.
- Operational Efficiency: With access to both pre-shipment and post-shipment credits, e-commerce exporters can better manage their operational cash flows.
- Regulatory Clarity: The notice also adds a layer of regulatory clarity, as it formally communicates the RBI’s stance on the issue, clearing any ambiguities that may have existed.
Reporting Issues: The notice also provides a channel for e-commerce exporters to report any difficulties they may face in availing such export credits to the Directorate General of Foreign Trade.
Conclusion: The trade notice issued by the Directorate General of Foreign Trade aims to resolve the ambiguity surrounding export credits for e-commerce. By explicitly stating that e-commerce exporters are eligible for pre-shipment and post-shipment export credits under existing RBI guidelines, the government has removed a significant hurdle for these businesses. This move aligns well with the broader objective of the new Foreign Trade Policy 2023, which aims to promote cross-border trade in the digital economy. Therefore, it can be seen as a positive step toward creating a more enabling environment for e-commerce exports from India.
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Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Trade Notice No. 26/2023-24-DGFT Dated: 4th September 2023
To
1. All E-Commerce Exporters
2. Members of Trade & Industry
3.Banking and Financial institutions concerned.
Subject: Pre-shipment and Post-shipment Export Credit and Packing Credit in Foreign Currency (PCFC) for E-Commerce Exports -reg
Reference Chapter 9 of the new Foreign Trade Policy 2023 on ‘Promoting Cross Border Trade in Digital Economy’, it is submitted that consultations were held with industry representatives, exporters, and nodal departments on outstanding issues pertaining to exports through E-Commerce. One issue flagged was the unavailability of Pre-shipment and Post-shipment export credit for E-Commerce exports. In this regard, consultations were held with RBI.
2. Reference the said consultation with RBI, it is clarified that “Master Circular-Rupee / Foreign Currency Export Credit and Customer Service to Exporters” furnishes a comprehensive framework, allowing for access to Pre-shipment and Post-shipment export credit and Packing Credit in Foreign Currency (PCFC) to all eligible exporters which does not preclude E-Commerce Exporters.
3. Banking and financial institutions concerned are therefore encouraged to extend Pre-shipment and Post-shipment Export Credit and Packing Credit Loan in Foreign Currency (PCFC) to E-Commerce exports based on the extant guidelines issued by RBI. Any issues in availing such Export Credit may be brought to attention by E-Commerce Exporters or banks to this Directorate.
This issues with approval of the Competent Authority.
(Md. Moin Afaque)
Deputy Director General of Foreign Trade
E-mail: afaque[dot]moin[at]gov[dot]in
[File No. 01/94/180/307/AM20/PC-4/E-20480]
