Introduction
It is possible that a recent policy push — combining the DGFT draft proposals on inventory-based, export-only operations by e-commerce platforms and E-Commerce Export Hubs with the partial restoration of export remission schemes convictions — could hasten the process of importing India’s millions of MSMEs into cross-border e-commerce. Done right, they change can boost export volumes, incentivize small producers at the unit economics expense, and generate actual jobs across logistics and compliance services. But the risks are real: market concentration, quality or compliance failures, regional imbalances or dependence on a few platforms. Smart safeguards – like targeted onboarding, caps or ring-fencing for platforms, strengthened certification and dispute resolution, or regionally distributed export hubs – will determine if benefits are democratized. The policy change: what was done, in which order. In the very end of September 2025, the Directorate General of Foreign Trade circulated a confidential draft that would essentially enable foreign and domestic e-commerce platforms to run dedicated export entities that hold inventory supplier-wise and export directly and hence would be operational-wise only. The DGFT draft prescribes the measure be export-only, lays down penalties for diversion to the domestic market, and proposes a pilot rollout before the measure is scaled up. This is a meaningful change in the operating model for how platforms can participate in trade.
These rules changes are happening in parallel with government action: (a) the proposed E-Commerce Export Hubs (ECEHs) pilot plan, which is meant to cluster facilitation services related to logistics, customs, returns handling and quality certification for small exporters; and (b) restoration of some RoDTEP benefits for particular classes of exporter from June 1, 2025. Altogether, the efforts point to a broader drive to reduce friction for cross-border e-commerce by matching regulatory approvals with infrastructure and incentive support.
How mechanics alter economics for MSMEs
Three economic channels matter:
Lowering fixed costs via aggregation: Aggregation platforms reduce sellers’ per-seller fixed costs (bilateral international shipping contracts, bilateral customs brokerage, returns handling). Fixed costs inevitably stand in the way for a micro-producer of the transition from occasional domestic online sales to regular cross-border shipments — platform aggregation reduces this barrier.
Better unit economics and cost competitiveness: Centlized packing, bulk freight negotiation,content is easier to understand optimise the per-unit logistics and compliance costs. In conjunction with a reintroduction of remission for eligible categories, this drops the net landed price to buyers and provokes additional demand and volume.
Market access and demand discovery: Platforms provide marketplaces, marketing and data analytics to match niche Indian products (handicrafts, speciality textiles, homeware, wellness products) relatively more efficiently with global pockets of demand than individual exporters can do.
Together these channels could help turn low-volume, high-unit-cost products into exportable product lines: a rise in the share of active exporters and an increase in per-seller export revenue over time. Empirical context: Exporting MSMEs in India increased from an estimated 52,849 in 2020–21 to circa 1,73,350 by 2024–25, suggestive of significant latent capacity that could be released if barriers come down.
Immediate and medium-term economic effects (12–36 months)
Greater number of exporters and volumes of exports
By employing export-only inventory models and a hub facilitation, many more MSMEs — particularly those that are already selling domestically online — can graduate to cross-border sales without having to grapple with complex rules. Statements from industry and government suggest that the policy seeks to substantially increase the proportion of e-commerce in India’s export basket; pessimistic estimates predict a large boost in cross-border B2C volumes if pilots are successful. India Brand Equity Foundation+1
Value-chain job creation
E-commerce exports are driving growth in warehousing, packing, shipping, customs brokerage and returns handling. Export hubs amplify local multiplier effects, which may create jobs in non-metro clusters with substantial concentrations of small manufacturers and artisans. Government reports show momentum in manufacturing and exports continuing into 2024-25, providing evidence that supply-side capacity is there to deliver. Press Information Bureau+1
Competitive pressure and price effects
Low logistic cost and remission benefits make Indian product price competitive in the international market. But increased seller (as well as seller-platform) competition might squeeze margins at the seller level, unless platforms are delivering value added services that justify their fees (such as financing and quality control).
Winners and losers
Winners
- Producers who are micro and small, offering differentiated products and with reduced export experience (handicrafts; niche clothes, handcraft jewellery).
- Where now established platform firms can vertically integrate export functions and drive new revenue.
- Logistics and compliance companies ramping up small-parcel overseas services.
At-risk groups
- Independent exporters unable to access big platforms may be squeezed on price or market reach.
- Small traditional retailers and exporters scared at the power of platforms to establish a market and do unfair commercial practices. Reports indicate that trade bodies have raised concerns on tracking diversion to domestic markets. Investing. com
Risks, hazards and second-order effects
Market concentration and anti-competitive behaviour
Including inventory holdings and exports could concentrate export flows into a small number of capital-abundant platforms. India’s competition authority has looked into platform behavior before, and regulatory scrutiny will be necessary to tamp down on discriminatory conduct and provide fair seller access.
Quality, compliance, and reputational risk
Unsubstantiated scaling may result in higher returns, selling bans by marketplaces abroad, and the degradation of “Made in India.” Certification, batch testing, and seller-strengthening are required for effective hub services. If import/export hubs congregate in developed states, hinterland artisans will be excluded. In order to avoid exacerbating regional imbalances, obtaining equitable posture for hubs and an investment in last-mile logistics will be critical. Although government-plans for pilots emphasize distributed pilots, the specifics of implementation are critical.
Two examples are shown below
Case Study 1: a handicraft cooperative in Rajasthan, an SMARTE entrepreneur who is small maximal and reactable
Cluster of 40 artisans: a handicraft cooperative producing block-printed linens; selling to domestic buyers and conduction of tourist sales. The platform-run export entity, allowed under more relaxed rules with the support of an export hub export, combines inventory from the cooperative; offers standardized export packaging comprise; cooperates with consolidator for customs clearance; and helps to secure necessary compliance certificates for them tweeds ) fibres content, phytosanitary if needed. Result in 24 months: the cooperative had accessed three new overseas marketplaces, export revenue increased 2 – 3 times, local factory work grows (packers quickly auditors); cooperative’s signing of an exclusivity deals that restrict their selling via other channels, capture both advantages and lock-in dangers.
With platform export entity and RoDTEP restoration: The platform looks after certification pipeline, negotiates courier rates and handling of returns. The exports grow fast, the company gains in terms of lower per unit freight and a predictable incentives regime. Risk: Some margin to be shared with platform and company may become over-dependent on a single export channel if it chooses not to build its own.
Recommendations — Maximizing inclusion and minimizing harm
Pilot + Evaluate: Do through time-bound pilots with defined criteria (no of exporters onboarded, share of MSME exports, return/compliance failure rate) before you scale. The DGFT’s draft envisages a pilot — and that should have to be clearly laid down. Reuters
Ring-fencing & anti-diversion protections: Enforce a restriction of export only stock by audits, sanctions and tracing requirements (e.g. digital export ledgers). Mandate regular standalone audits of platform export concerns.
Competition protections: Place non-discrimination duties on platforms for seller access, search ranking and fulfilment benefits; a requirement to share data with regulators (of anonymous trade patterns) to track concentration.
MSMEs up-gradation: Scale Export Facilitation Centres under MSME and provide subsidy/grants for certification and packaging. Pair with instruction on global market protocols and conflicts resolution.
Equitable geography: Deploy zone-based incentives to locate ECEH pilots across diverse states, in order not to concentrate dividends in metros; scatter hubs and last-mile logistics grants for outlying clusters. Press Information Bureau
Reliable Predictable Incentive system: Preserve roDTEP remission schemes with multiyear stability in order to allow MSMEs would invest and Platforms can underwrite export finance in a predictable manner. Press Information Bureau
Measurement — metrics that policymakers and stakeholders should monitor
- Count and proportion of new MSMEs exporting and contribution to top lowest percentile export entities.
- Average Export Value per MSME (pre and post pilot).
- Return and cross-border complaints quality/compliance).
- Exporters\’ geographic location by hubs.
- Market concentration: % of cross-border e-commerce exports through top 3 platforms.
