New Delhi has unobtrusively overcome one of the final obstacles blocking the path of India's foreign-funded e-Commerce giants to a full-fledged export manufacturing push. On Wednesday, the Directorate General of Foreign Trade (DGFT) issued a guideline to commerce platforms like Amazon and Flipkart on the working procedures of the proposed inventory-based cross-border ecommerce facilitation framework, essentially giving them a rulebook that allows them to begin stocking Indian products for export. The public notice is issued along with a new form (ANF-9A) where companies desiring to be exporters-on-record will now have to register with the DGFT from today.

This comes on the heels of Commerce Minister Suresh Prabhu's July decision that granted an exemption to foreign direct investment in inventory-based e-commerce by waiving an existing ban. The ban has been in place for more than 10 years for the purpose of preventing foreign deep pocket sites from eating into the business of the Indian kirana and retail outlets. The carve-out, announced in July, left the wall intact for domestic business, but removed a door from it for export business, pointing out that a firm purchasing Indian-made products for sale to an Ohio or Frankfurt buyer is "not a threat to an Indore shopkeeper". That's the policy statement that becomes a reality for companies on Wednesday.

It's the mechanics that are important here, as they give you an indication of where the real weight of this policy is being applied. Once registered, the role of the exporter-on-record will be to take responsibility for the physical inventories of the goods, for the compliance of the goods with the individual Indian exporter's declaration, and for compliance with the importing country's testing, labelling and certification requirements prior to the goods leaving the ground within India. All seller relationships must be documented digitally from procurement details, GST invoices, and the corresponding export documents, and have to pass an annual compliance audit by a chartered accountant or other qualified expert. For those interested in seeing the impact on small manufacturers, there is a limit to the amount of administrative charges a platform can deduct from a seller's export benefit or rebate that can be kept by the platform, and those deductions must be sent to the seller within 30 days. The hat is what makes the difference between an artisan or small manufacturer whose business for years has been confined to India and one who can now afford to rely on the platform's margin to cover an export order.

The size of the scale under discussion is not a small one. At 4-5 Billion dollars, India's e-commerce exports constitute a small fraction of the country's total merchandise exports of about 770 Billion dollars. The government's own goal, echoed by successive commerce secretaries and DGFT officials in the past two years is to achieve that by 2030, as part of its wider trillion dollar export target for goods. It is in this much detail because they did not want to, or even can, leave it open, or vague; otherwise, they would be only about one hundred times greater in the next ten years, which is the lower end of that band. Amazon alone has announced cumulative exports worth over USD 20 billion from India from 2015 to 2025 and separately has pledged to achieve USD 80 billion exports by 2030 with the help of thousands of small manufacturers to be handled by its export system.

But little has been said publicly about whether India's exporting infrastructure can handle this volume before the paperwork takes over from being an enabler to becoming a blocker. Industry experts in the cross-border logistics space have been pointing to three issues that most exporters, whether it is a big platform or individual sellers, face in some way or the other at some point of time in the coming months the return of 3PLs and returns, which is still a clunky and costly process across most Indian ports and couriers; repatriation of export proceeds through a banking system, which was not designed around micro-consignment e-commerce flows; and customs clearance process, where a single misfiled declaration can delay a shipment to a much longer duration than the actual transit time. It is interesting that the new framework does include reverse logistics and dispute resolution as separate heads, indicating that the DGFT has been paying attention to precisely this feedback, but the actual proof will be when thousands of small sellers, and not a few large exporters, are hit by these provisions at the same time.

The whole global aspect is not to be ignored by Indian exporters. Other developed markets are introducing traceability requirements, with the European Union's Digital Product Passport regulatory scheme progressing towards a documentation of products at the lifecycle level when entering the EU market. To be sure, a scheme which compels Indian exporters-on-record to follow digital trails from procurement to export, both by design and by convenient timing, is bringing India's small manufacturers on board just the sort of paper trail that foreign buyers will now demand be followed as a precondition of entry. In comparison to China, which relaxed tax exemption and paperwork for its cross-border ecommerce exporters a decade ago, it appears that the Indian government is trying to catch up with a template that has worked for a larger competitor before.

The short-term beneficiaries are self-explanatory. The big platforms have a clear legal footpath to expand for exporting warehouses, not having to get approvals on an individual basis. That little manufacturers who've been losing money and time in exporting goods on their own have now got a way to sell to buyers abroad, with the added bonus that compliance requirements are not as onerous as they might be. While the 200-300 billion dollar goal by 2030 is ultimately up to debate, the infrastructure and the tools to make that a reality be it registration, inventory transparency, accountability or safeguards for sellers and disputes resolution are now a reality.