Customer Care No.

91-1145562222

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
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These schemes are as followsa. 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-commerce2as 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 ecommerce 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-aliaimplying 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.
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Customer
Care
No.a91-11There has
been
never ending debate going on with respect to the e-commerce
space in India.

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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,videNotification No. 2/2015-204has 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.
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(DIR Series)
Circular
to time."
Customer
Care No.
91-11-No. 16 dated September 24, 2015] as amended from time

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