MSME Industry Seeks E-commerce Export Reforms from RBI

Key Challenges in Current Regulations

• Manual Reconciliation Issues
  • Matching shipping bills with inward remittances (IRMs) manually is impractical for high-volume e-commerce exports.
  • Current system leads to delays, excessive documentation, and operational inefficiencies.
• High Compliance Costs
  • Shipping bill regularization fees range from ₹200 to ₹2,500 per shipment, disrupting cash flow.
  • Small exporters face excessive banking fees, unpredictable logistics costs, and high warehousing expenses.
• Documentation Burden
  • Exporters must submit cover letters, Foreign Inward Remittance Certificates (FIRCs), payment gateway statements, and CA certificates.
  • Delays in shipping bill closure worsen cash flow constraints.
• Logistics Challenges
  • High shipping costs make small-value shipments ($25 or 2 kg) unviable.
  • Fluctuating shipping rates and expensive warehousing solutions further reduce profit margins.

Industry Proposals to the RBI

• Automation of Reconciliation via AI
  • Request for an AI-powered system within the Export Data Processing and Monitoring System (EDPMS) to auto-match IRMs with shipping bills.
  • The system should account for marketplace fees, refunds, and variations in remittance amounts.
  • Enable bulk transaction uploads to eliminate manual processing of each bill.
• Reduction in Compliance Costs
  • Standardized fees for shipping bill regularization (e.g., ₹5,000 annual reconciliation fee for exporters under ₹5 crore turnover).
  • Limit per-bill charges to ₹100 for transactions over $1,000.
  • Remove CA certificate requirement for MSMEs with turnover ≤ ₹5 crore, replacing it with self-declaration forms.
• Simplification of Reporting for Small Shipments
  • Exempt small shipments (under $1,000) from EDPMS reporting.
  • Allow annual declaration of these transactions via a simplified system.
• Establishment of a Digital Dispute Resolution Portal
  • To address unfair penalties, processing delays, and disputes within seven days.

Industry’s Urgent Call for Action

• Government’s $200 billion e-commerce export target by 2030 requires regulatory streamlining to sustain and expand MSME participation.
• High regulatory costs & procedural bottlenecks discourage small exporters, impacting India’s global e-commerce trade potential.
• MSME bodies urge RBI to take swift action to ease compliance and reduce financial burdens.

Way Forward

• AI-driven automation, fee standardization, and reduced documentation are essential to enhance efficiency in e-commerce exports.
• Addressing logistics, compliance, and reconciliation challenges will help small exporters scale operations and improve cash flow.
• RBI’s policy interventions can unleash the full potential of MSME-driven e-commerce exports and accelerate India’s export growth.