My struggle with e-commerce exports

An in depth details explaining the pain of sellers and non-supportive government.

e-commerce exports

China’s retail export through e-commerce was 1 Trillion Yuan in 2015 of which 11.5 % approximately 15 billion dollars was B2C.

With the advent of e-commerce in India, sellers are waking up to the possibilities of retail export. It’s picking pace in India. Currently retail exports form a very small fraction of e-commerce. It has a huge potential to grow. This growth has been marked down by age old rules, harassment by government officials and bullying by banks.

Sellers are being forced to do retail exports the illegal way. They sell low cost products ranging from 10-50 dollars. If you export by commercial method, sellers have to pay high clearance charges. Also the amount received on sales will be paid after deducting commission and other charges. There are times when the buyer chooses to return back the product. In such cases sellers refund the amount completely as getting back a product sold through e-commerce is a challenging task. Sellers end up paying custom duty and other charges in order to get their product back. Since no one wishes to go through this daunting task they choose to forgo this money.

The beginning

My struggle began in 2015 when Amazon Global sales team approached me for opening an account on Amazon.co.uk. The option of selling internationally was tempting and I on boarded with them. I inquired them about the documents required and Amazon clearly stated that there is nothing required. They helped me tie up with a courier company called Bombino Express.

Two months down the line I was happy sending my goods to US when I spoke to one of my friends Saurabh and explained about the export that I have been doing. He enlightened me about the requirement of IEC (Import Export Code) and the importance of quoting it on every shipment. Immediately I contacted the courier partner and they stated that since my products were being sent in sample mode this requirement has been bypassed. I was not satisfied by this reply and applied for IEC and quoted them on all the shipments sent.

I had started exporting from July and in February 2016 I approached the DGFT, Kormangala office to get my queries resolved related to e-commerce retail exports. There I found that none of the officials were aware that such a medium of exports exist.

My search led me to Export Policy FY2015-20. The copy that I had in February 2016 just mentioned e-commerce export and MEIS scheme for 5 categories of product. It said that exports should be through foreign post office with a value below Rs 25000. The details were later added in the revised versions of policy. A visit to Foreign post office gave the same results. None of the officials had any details on the export through e-commerce, even though I had a print out of the policy in my hand.

Mails to Government organisation

I started contacting various organisation in order to understand the legal way to do an e-commerce retail export (Refer image email-1). Dropped a mail (Refer image email-2) to FIEO (Federation of Indian Export Organisations) and explained the issues plaguing exporters. I had a personal call with one of the members. They accepted the issues, since not many of them had raised the concern they could not take it forward.

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I was joined by Abhijit Patil who helped me connect with the DGFT team. Together we sent in mails and reminders to understand the export procedure. We were disheartened as none of the agencies responded with any details.

By March 2016, being an apparel exporter, I dropped a mail to R Balaji of APEC India (Refer image email -3). I wasn’t expecting any response and I was right. Tempers and frustrations were running high. Up to this point nothing was clear on the export policies. On 15 March 2016, I dropped a mail to all the departments combined (RBI, DGFT, DIPP and others). RBI contacted me stating that the queries can only be handled by Foreign Exchange Department. That’s when I came in contact with Sakshi Parihar.

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RBI Answers

She helped me with few queries related to compliance of export. As per her statement the export procedure followed by us was correct except that the products cannot be shipped as samples. I explained her the high costs involving with commercial exports. The courier law clearly states that no remittances can be received on sample exports. She also put me in contact with ParmeshwarNath , paypal head.

On contacting Parmeshwar I found that ebay has been fighting similar battle from a long time. All payments through Paypal are routed through OPGSP (online payment gateway service provider). This ensures that all payments received for products sold through eBay meet RBI compliance. You can refer to eBay RBI issue where eBay was banned for few months from selling online as payments received were in dollars.

In April since none of the government authorities were responding, the issue was raised with the PG portal. Find the response in image. Even a tweet to mociseva was received with an answer to connect to another department (refer image tweet-1) .

Bulk Shipment issues.

Since there was no answer with any department I gave up and focussed on my business. In July 2016 I started sending bulk shipments to USA. This opened another can of worms.

All shipments sent to US FBA warehouse are treated as sales and a Sales invoice needs to be raised. Indian government does not have any rules for international stock transfer.

Sending a bulk shipment involves realisation of transaction against the export that has been made. In order to do so you need a Foreign inward remittance certificate (FIRC). This document ascertains that you have exported and that the remittance received is against it. This has to be attached with Exchange control copy of customs and submitted along with MAWB (Airwaybill), Invoice and Packing list to your bank. The bank will then realise the export thus generating e-BRC. The realisation date is within 270 days of export. You need to apply for an extension with your bank citing valid reasons.

Export is a highly regulated process. You need to comply with all the rules of RBI (FEMA) else the consequences involve severe legal issues. There are sellers who are behind bars for failing to comply with such laws.

I wasn’t aware of the facts mentioned above. To start off I just applied for FIRC with HSBC bank as Amazon routes all it’s international payments through them. HSBC takes it’s own time to respond. For an application sent in July 2016 they came back with a response in September. With the new FEDAI circular FIRC’s were no longer issued. I received inward remittance details from them.

When I approached my bank with the details, they stated that since the amount received was in rupees and the export was in dollars, it cannot be realised. I contacted Sakshi and she sent me letter explaining how through EDPMS banks could realise the transaction in other currencies.

E-BRC and success

Once again I approached the bank with the new information. They reluctantly agreed to work on it but said I need to give them the inward remittance details of HSBC. Since I had remittance details till July 2016 only from my previous correspondence, I needed details after that. So in December 2016 I applied for the remaining transactions that is from July to December. HSBC responded after 20 days stating they needed transaction details. These details are found in the banks inward via NEFT. To get them one has to check all those dates on which a remittance was received and write them down individually. This consumed another 20 days and we were almost at the end of February 2017.

After sharing the details HSBC did not respond. As a result I raised a complaint with banking ombudsman. The copy of the letter was attached and sent to HSBC who replied within a week with all the transaction details.

Finally all the details were ready but another challenge remained. The amount received in rupees was not matching exactly with the shipment sent. In a normal export the amount exported against an Invoice will receive a payment equal to the invoice raised. In case of Amazon’s export there are times when you receive more or less payment for a shipment sent. For example if you have sent goods worth 1000 dollars you might end up getting 900 or 1500 dollars as payment. Also Amazon does not provide payments against Invoice numbers that has been raised by us.

There is also an uncertainty at what value the goods will be sold in the warehouse. There are times when you need to destroy them. Since there is no invoice to invoice payment realisation becomes difficult.

For this a solution has been provided where banks can realise them partially and generate e-brc. So finally they were able to close the transaction and e-brc was generated successfully.

Highlights

I would like to highlight few important points

1) Amazon’s Global selling team blindly on boards sellers. Make sure you know the details and pitfalls of selling internationally.

2) Amazon’s Global team also misguides seller’s intentionally. Check with fellow sellers before believing their statements.

3) HSBC still continues to ignore sellers request for inward remittance. Many sellers have applied through their banks but no response received. It’s better you apply early so that the time-line for realisation is met.

4) There is still no clarification as to how Amazon transfer’s money to India. A complaint has been made to RBI in January for which response is pending. Also a mail to Jeff and Amit gave no results.

If you have been exporting through Amazon and would like to know whether you are in trouble with RBI. Visit your Forex branch of your bank and ask them to check your IEC in the caution list. If you are in the list don’t worry you still have time to rectify this.

There are lot more things that this article does not cover. I will try to answer them in subsequent ones. We maintain an International whatsapp group but that’s running full. In order to get quick answers to queries on International selling you can join the ECSAI.org telegram group by registering on this link https://goo.gl/vxfKkX

Would you like to submit an article. Fill the contact form here

53 Responses

  1. Dinesh Jain says:

    This is an eye opener. I have just signed up with ebay.com a couple of days back. They Ebay exec told that only PAN number is enough to start exporting in retail. I have not listed my products still, now will have a 2nd thought whether I should start doing it also or not.
    Nothing is more worse than landing into trouble with the government agencies because that will suck every drop of blood left in your body. I would rather stay away than getting lost in this Labrynth.
    Thanks Rohit for sharing your knowledge with us. Good luck with your fight with these guys. Pls do let me know if I can be of any help.
    I’m a seller from Chennai.

    Cheers!

    • Rohit Singal says:

      Ebay is more organised and follow all regulations. They are registered with OPGSP. You can go ahead with them. The above issues are faced when you do bulk shipment which ebay does not offer.

  2. Sanjeev Garg says:

    That is a tough fight

  3. Vishal Drolia says:

    Rohit, first of all thanks for the detailed article, it is brilliantly analysed.

    One query here though, what is legally wrong here if one doesn’t want any remittance benefit, he ships product as sample and receive payment in bank accounts in rupess.

    Thanks

    • Rohit Singal says:

      Visual e-brc is applicable only for bulk shipments. For individual in sample mode you can continue.

      • Anupam says:

        Rohit, the seller would still be paying Sales tax for an item he has exported in this case. Not to mention if he receiving payment for a sample, it is against the laws and would subject him to action by DGFT, and may be under FERA too. The simple thing for the government to do is set up a eCommerce export division which regulates small retail shipments.

        • Rohit Singal says:

          Things have changed. Sample/courier mode is accepted after foreign trade policy of 2015-20. In another 2-3 months the government is going to capture all details in EDI.

  4. Shakti Gandhi says:

    Hey rohit, congrats on finally succeeding in closing a transaction and also thanks for opening door to export(in legal way) for many small sellers… great work

  5. Kawaljeet says:

    Wow mr. Rohit you did a great job, i analysed your situation & found many situations where i also landed but i ignored them i started in early 2005 this via eBay & paypal got IEC most of the payments were via Paypal as my paypal was linked to my C.A/C & many times i get a cheque via post as well but my Father got expired in 2007 who was the owner prop of that co. & i also shifted my focus from export to local indian sites in 2009 onwards
    But suddenly there was no option to change PROP IN PAYPAL i tried to open a new ac a new prop my brother. But all got rejected all my accounts got in Pending state resulting no payments & from past 5 years we got shift to domestic sales but Ebay & paypal are now not in a tieup also i approached amazon.com but there is no reply .
    Kindly connect with me as i am also very much upset by these methodology there has to be solloutuons for these problems

  6. Kush says:

    Rohtji this is just the start of your troubles.

    We have been exporting since 25 years now and I am personally looking after compliance since 7 years.

    Now wait for the attack of the babus.

    Start expecting letters from DGFT, Customs and RBI asking you for paperwork on how u got BRC, explanation for settlement of more or less funds received against shipping bill.

    In DGFT it is known as scroll and you will be able to track your scroll by entering your iec on dgft.gov.in

    Everytime they open the scroll, u have to do the same paperwork over and over again in a inebound manner.

    Unfortunately this is how the system works.

    • Manoj says:

      I am exporting via Amazon.com for 9 months now – Just got approached by a babu – wants to check on the original papers of my office ownership !! Original electricity bill in my name will not do – Got to see what this is all about.- Delhi Customs

  7. Dinesh Subramaniam says:

    I think it is not allowed to export samples through courier mode and get remittances. The declaration that is signed under the courier mode will land you in trouble if any foreign exchange remittance is involved. Leave alone any benefits that you are entitled.

    @Mr.Rohit, FIRC is still being issued for remittances which involve service exports and the circular issued by RBI for issuance of FIRC is still not rescinded. I dont think FEDA’ s guidelines gains legal importance and it does not have a overriding effect on a RBI circular. Declaration for remittances is exempt under RBI rules.
    Correct me if I am wrong…..

    • Rohit Singal says:

      I agree to your point that I cannot receive remittance against samples. Then again the Foreign trade policy 2015-20 clearly states that export under courier mode is allowed for e-commerce. I have raised the query with customs as these are two contradictory statements.
      Whenever I have spoken to RBI they always state the FEDAI circular for FIRC. It does not matter much now since the inward remittance details is equivalent to FIRC and few of us have been able to generate e-brc. I am not aware of the exemption of remittance declaration. Drop me a mail at contact@ecombites.com and share your contact. I need to talk to you.

      • Dinesh Subramaniam says:

        Mr.Rohit, You have missed an important qualifying word in the Foreign Trade Policy which states that courier exports are allowed as per Notifications of DoR. Specific provisions prevail over General provisions.

  8. Manoj says:

    Love this post Rohit – what you have done till now – I would like to be kept abreast of – Can we talk on whatsapp or phone ?

  9. Manoj says:

    Rohit – I am in the exact same situation – got to get the remittance details from HSBC – who in HSBC should I write to – where do I send the email ? I need my bankers to create the E-BRC against my remittances to fullfill the compliance noms. Please let me know the email address where I can request HSBC to give remittance details of my amounts received. I have a list of all amounts received.

    • Rohit Singal says:

      We already have a WhatsApp group. In fact the group is almost full. We maintain another group under ECSAI.org. I am online in these groups all the time and try to resolve seller queries. You can register with us by dropping a mail to contact@ecsai.org

  10. vishnu says:

    If i have an account HSBC And getting amount from Amazon to HSBC account .how to get firc and e-BRC gets clear

  11. Rohit Singal says:

    FIRC is no longer issued. To get e-BRC you need to get the Inward remittance details from HSBC. Connect with these guys at indianexportspn@gmail.com they will help you out.

  12. aditya says:

    Hello All

    We are in similar line of business. Looks like GST will make it tougher for us to do business as we will be required to pay IGST on sales invoice. The amount will be refunded to us on submitted custom docs which we won’t have. Thoughts??

  13. Samraat Deol says:

    Hi Rohit,
    Reading this felt like I had written this. Same challenges, same frustrations and going around in circles. In addition, FIRCs issues by CItibank to my ICICI branch were rejected since the remitter was mentioned as PayPal in all cases.lol.
    And many of my small export orders were paid via PayPal where in the person/company on the Shipping Bill did not match the one who paid – did you face any such issues.
    Next week the new Foreign Trade policy is coming out – I was told by an agent.
    I feel we should seek a “green channel” export clause – where by one exporting through such a method says I don’t want any charity from govt and in return I only need to update one site (RBI) with inward remits. Dropping you an email to add me to the Whatsapp group.
    Look forward to connecting with you.
    Regards,
    Samraa

    • Rohit Singal says:

      Yes by June 30 the revision of foreign trade policy will be released. Waiting eagerly for it. As for RBI, Custom and DGFT goes even RTI on them did not yield any results. I will add you to the group.

      • Samraat Deol says:

        Thanks Rohit – look forward to seeing what other guys are struggling with! Seeing your attempts, I feel re-charged to take my issues head on 🙂 Hope they improve things in this review, else we just hand over everything to China.

  14. Hi Rohit,

    I am an employee of FEDERATION OF INDIAN EXPORT ORGANISATIONS and feel really sorry that you queries was not resolved in first place. I may state here that if you require any help from the Federation regarding E-Commerce Exports and getting your BRC from AD Banks, FIEO is at your disposal always. We shall be more than happy to to help you.
    Thats what FIEO is all about.

    If any of you are facing problems in procuring BRC from your AD Banks for your exports done via E-commerce & payment received via OPGSP (paypall etc.) kindly contact FIEO for assistance.

  15. sachin says:

    Thanks. Great post.

  16. Sunil says:

    Hi,
    I have a query related to bill of lading.
    Is BILL OF LADING a compulsory documents that one has to give to the auditors to file the returns on exports.
    I also understand that amazon does not give this document. Henceforth, what is the procedure and the way around the same.
    Thank you

  17. Vishwas says:

    Quite a read!. All the best with your fights with GOI. I am curious, whether similar thing is being done for ecommerce imports too?. On eBay Global Buying & Amazon Global Store?.

  18. Sourabh Goel says:

    I was going through all the posts its was mentioned that a new foreign trade policy is due by June 30. Does it came through? Any respite for e-commerce exports? We were told that we need to pay IGST on our export sale and then the same needs to be claimed. But we are not sure whether the claim departments will consider this as EXPORT?

  19. gem says:

    Hello,

    I had written a similar post regarding these problems & especially after GST would appreciate if we all can resolve it .

    http://www.caclubindia.com/experts/ecommerce-exports-digital-imports-under-gst–2549344.asp

  20. NItesh bhagchandani says:

    Hi I got letter from fedex for MEIS credit for commercial shipment if I follow that then i have to right full price then many of my parcels will not be accept by buyer’s because they not want to pay taxes locally please help….

  21. Arjun says:

    Any resolution to the retail exports

    • Rohit Singal says:

      Yes finally we do have a solution for retail exports. The solution is currently in infancy stage and being rolled out to sellers across India. You can join our whatsapp group to get updates on exports plus get your doubts cleared from other sellers as well.

      • Imran says:

        Hi Rohit,

        I am a retail exporter as well and I am far more confused with these export procedures. I would like to join the whatsapp group for updates on this new bill.

        Also is there any clarification yet on whether or not we will be required to pay IGST on all our sales? Also, do we need to get shipping bills from exice for all our shipments?

        Thanks

  22. Sourabh Goel says:

    hi rohit

    how to join your whatass group. My phone number is

  23. Biren M. says:

    Hi Rohit,

    Please add me to your WhatsApp group. My phone number is

  24. Akash Mittal says:

    Hi Rohit,

    Please add me to your WhatsApp group. My phone number is .

  25. ashish says:

    hi rohit add me in whatsapp group
    my phone number is 9313034314

  26. Rafiq says:

    Hi Rohit,

    I sincerely appreciate your stupendous efforts to highlight the pains and troubles that this lucrative Retail/E-commerce exports industry is suffering from due to the ambiguous policy,

    I am keenly wondering whether you have any update on the solution to retail exports that you mentioned in one of your comments is going to be rolled out,

    Please add me to your whatsapp group, my whatsapp number is +91-8564878398,

  27. AAshish says:

    Please add me to your WhatsApp group. My phone number is 9868841685

  28. Sidharth Kapoor says:

    Hello Rohit

    I am sailing in the same boat. Please add me to your whatsapp group. (my mob no is +91-9878668822)

    I have also sent an email contact@ecsai.org

  29. Sidharth Kapoor says:

    Hi Rohit,

    Please add me to your WhatsApp group. My phone number is

  30. This post is worth everyone’s attention. When can I find out
    more?

  31. rahul jindal says:

    please add me to the group as me too sailing in the same boat

  32. ashish says:

    if we send single item export goods through indian post , in this case ebrc and firc is necessary , becuase my axis bank said ebrc cannot issue on india postal receipt without proper shipping bill.

    • Rohit Singal says:

      Yes your bank is right. On Indiapost shipping bill it’s difficult to provide an e-brc for individual shipments. Currently we have CSB-5 for individual shipments in courier/sample mode and courier service like DHL are providing shipping bill for them. You can get e-brc using CSB-5 shipping bills. For more info you can join our group

      • ashish says:

        rohit i read on dgft site we can get postal bill of export for maximum 10 transaction ( one bill is enough )from foreign post office as a shipping bill , is tht right ?
        9313034314 my number add me in grp

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