Context
Recently, Invest India stated that India, with its rapidly growing digital economy and expanding internet user base, is poised to become a global ecommerce powerhouse by 2030.
Key Highlights
- India, with its hastily growing virtual economic system and increasing internet person base, is on the brink of a large transformation in its retail sector.
- At present, the e-trade market in India is worth $70 billion, which accounts for around 7% of the state’s common retail market.
- It is anticipated to grow to a staggering $325 billion, and the country’s digital economic system is expected to attain $800 billion.
- The number of on-line consumers in India is projected to boom with a compound annual growth rate (CAGR) of 22% to 88 million in rural India and 15% to 263 million throughout urban India between 2019 and 2026.
- It is expected to result in India surpassing the US as the second largest on-line shopper base in one to 2 years.
Attractive Opportunities
- India’s e-commerce platforms completed a considerable milestone, hitting a GMV of US$ 60 billion in financial year 2023, marking a 22% growth from the previous year.
- The e-retail market in India is projected to surpass US$ a 160 billion by 2028.
Rise of the Digital Economy
- India presently boasts the second-largest internet user base in the world, with over 900 million users.
- By 2030, it’s anticipated to upward thrust to the third position in the online retail industry.
- This growth is driven by increasing internet penetration, with around 87% of Indian households expected to have internet connections by 2025.
- The duration of internet access through mobiles has seen a 21% rise compared to 2019.
Role of Mass Consumers
- Indian customers with annual incomes ranging from INR 2.5 lakh to INR 10 lakh could be liable for riding nearly half of the growth in India’s $300 billion e-commerce market by 2030.
- These ‘mass’ purchasers are projected to make a contribution around $135 billion (45%) to the Gross Merchandise Value (GMV) of the e-commerce market by 2030.
- Invest India anticipated a significant boom in the number of households carrying out e-commerce transactions, from 60-70 million in 2022 to 120-130 million by 2030.
- Notably, mass purchasers are predicted to power over 80% of this increase.
Challenges related to e-trade marketplace in India
- Digital Infrastructure and Internet Penetration: The robustness of virtual infrastructure is vital for easy and seamless online transactions.
- Any disruption inside the virtual infrastructure can cause transaction disasters, affecting the accept as true with and self belief of clients in e-trade.
- While internet penetration is increasing in India, there is still a significant portion of the population, particularly in rural areas, that does not have access to the internet.
- Platform Neutrality and Fairness: There are issues about lack of platform neutrality, unfair platform-to-business agreement phrases, special contracts between on-line market platforms and dealers/service carriers, platform price parity restrictions, and deep discounts.
- Taxation: The provisions on bring-forward of losses need to be more accommodative of business restructuring, and withholding tax norms need more clarity.
- Inclusion of Small and Medium Enterprises (SMEs): SMEs frequently discover it hard to take part in the e-commerce ecosystem due to the need for separate infrastructures for exclusive systems, distinct terms and conditions of each platform, and the costs associated with these.
- Regulatory Challenges: E-trade groups in India also face regulatory challenges along with troubles related to data protection, purchaser safety, taxation, and different criminal and regulatory compliances.
Related Initiatives to Overcome Challenges
- Policy Support: 100% FDI is permitted in B2B e-commerce.
- 100% FDI under the automated route is authorized within the market version of E-trade.
- Government e-Marketplace (GeM): It has facilitated government procurement, crossing an outstanding INR 4 Lakh Cr in GMV.
- Open Network for Digital Commerce (ONDC): It aims to offer the same possibilities to MSMEs to thrive in virtual trade and democratise e-trade.
- Other important initiatives consist of Digital India (to transform India right into a digitally empowered society and understanding economy), Skill India (to teach humans in unique capabilities), Startup India (to build a robust environment for nurturing innovation and startups within the country), Make in India (to inspire corporations to manufacture their products in India), Innovation Fund (geared toward encouraging entrepreneurship and innovation in the country), and BharatNet (to grow rural broadband penetration) and so on.
Conclusion
- The rapid growth of India’s digital economic system, coupled with the growing internet penetration and the upward push of the mass consumer phase, is about to propel India to emerge as the arena’s third biggest ecommerce marketplace by 2030.
- It affords a first rate opportunity for businesses and traders alike, making India one of the most attractive markets for ecommerce inside the world.
Source: The Indian Express
UPSC Mains Practice Question
Q.E-commerce is emerging as a key enabler and critical determinant of India’s growth and economic development. Analyse India’s e-commerce market in the light of India’s draft e-commerce policy. (150 words)
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