{"id":28151,"date":"2024-08-23T19:26:29","date_gmt":"2024-08-23T13:56:29","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=28151"},"modified":"2024-08-30T15:44:42","modified_gmt":"2024-08-30T10:14:42","slug":"e-commerce-in-india-a-matter-of-concern","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/23-08-2024\/e-commerce-in-india-a-matter-of-concern","title":{"rendered":"E-Commerce in India: A Matter of Concern?"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recently, the Union Trade Minister stirred up debate on India\u2019s e-commerce sector, instead of celebrating its exponential growth, he expressed concern.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About Status of the E-commerce Market in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India, with its rapidly growing digital economy and expanding internet user base, is on the brink of a <strong>massive transformation in its retail sector.&nbsp;<\/strong><\/li>\n\n\n\n<li>At present, the e-commerce market in India is valued at $70 billion, which accounts for around 7% of the nation\u2019s overall retail market.It is predicted <strong>to grow to a staggering $325 billion<\/strong>, and the country\u2019s digital economy is expected to reach $800 billion.<\/li>\n\n\n\n<li>The number of online shoppers in India is projected to increase with a <strong>compound annual growth rate (CAGR) <\/strong>of 22% to 88 million in rural India and 15% to 263 million across urban India between 2019 and 2026.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"dabba7\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"768\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2024\/08\/types-of-ecommerce-models-jpg.webp\" alt=\"types of ecommerce models\" class=\"not-transparent wp-image-28544\" style=\"--dominant-color: #dabba7; width:326px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2024\/08\/types-of-ecommerce-models-jpg.webp 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2024\/08\/types-of-ecommerce-models-300x225.webp 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2024\/08\/types-of-ecommerce-models-768x576.webp 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li>It is expected to lead to India surpassing the US as the second largest online shopper base in one to two years.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Factors Driving Rise of the E-commerce<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India currently boasts the <strong>second-largest internet user base<\/strong> in the world, with over 900 million users.<\/li>\n\n\n\n<li>By 2030, it is expected to <strong>rise to the third position in the online retail industry<\/strong>.<\/li>\n\n\n\n<li>This growth is driven by <strong>increasing internet penetration<\/strong>, with around 87% of Indian households expected to have internet connections by 2025.<\/li>\n\n\n\n<li>The duration of internet access through mobiles has seen a <strong>21% rise<\/strong> compared to 2019.<\/li>\n\n\n\n<li>Indian consumers with annual incomes ranging from INR 2.5 lakh to INR 10 lakh will be responsible for driving nearly half of the growth in India\u2019s $300 billion e-commerce market by 2030.<\/li>\n\n\n\n<li>The growth of e-commerce in India has been done by the advancement of <strong>efficient logistics and supply chain networks<\/strong>. Government initiatives, like the <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-09-2022\/national-logistics-policy-2022\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-09-2022\/national-logistics-policy-2022\"><strong>National Logistics Policy<\/strong><\/a>, have streamlined last-mile deliveries, significantly improving logistical efficiency and cost-effectiveness.<\/li>\n\n\n\n<li>E-commerce offers consumers the <strong>ease of shopping from their homes or on the go<\/strong>, saving both time and effort. For example, food delivery platforms like Zomato and Swiggy have become incredibly popular due to this convenience.<\/li>\n\n\n\n<li>Invest India predicted a significant increase in the number of households engaging in e-commerce transactions, from 60-70 million in 2022 to 120-130 million by 2030.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges Associated with E-commerce Market in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Platform Neutrality and Fairness:<\/strong> There are concerns about lack of platform neutrality, unfair platform-to-business contract terms, exclusive contracts between online marketplace platforms and sellers\/service providers, platform price parity restrictions, and deep discounts.<\/li>\n\n\n\n<li><strong>Taxation:<\/strong> The provisions on carry-forward of losses need to be more accommodative of business restructuring, and withholding tax norms need more clarity.<\/li>\n\n\n\n<li><strong>Inclusion of <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/14-03-2022\/micro-small-and-medium-enterprises-msmes-sector\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/14-03-2022\/micro-small-and-medium-enterprises-msmes-sector\">Small and Medium Enterprises (SMEs)<\/a>:<\/strong> SMEs often find it challenging to participate in the e-commerce ecosystem due to the need for separate infrastructures for different platforms, distinct terms and conditions of each platform, and the costs associated with these.<\/li>\n\n\n\n<li><strong>Digital Infrastructure and Internet Penetration:<\/strong> The robustness of digital infrastructure is crucial for smooth and seamless online transactions.\n<ul class=\"wp-block-list\">\n<li>Any disruption in the digital infrastructure can lead to transaction failures, affecting the trust and confidence of consumers in e-commerce.<\/li>\n\n\n\n<li>While <strong>internet penetration<\/strong> 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.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Regulatory Challenges:<\/strong> E-commerce businesses in India also face regulatory challenges including issues related to data protection, consumer protection, taxation, and other legal and regulatory compliances.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Related Initiatives to Overcome Challenges<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Policy Support: <\/strong>100% FDI is allowed in B2B e-commerce.\n<ul class=\"wp-block-list\">\n<li>100% FDI under the automatic route is permitted in the marketplace model of E-commerce.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/02-06-2022\/government-e-marketplace-gem\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/02-06-2022\/government-e-marketplace-gem\">Government e-Marketplace (GeM)<\/a>:<\/strong> It has facilitated government procurement, crossing an impressive INR 4 Lakh Cr in GMV.<\/li>\n\n\n\n<li><strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/01-09-2022\/open-network-for-digital-commerce-ondc-3\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/01-09-2022\/open-network-for-digital-commerce-ondc-3\">Open Network for Digital Commerce (ONDC)<\/a>: <\/strong>It aims to provide equal opportunities to MSMEs to thrive in digital commerce and democratise e-commerce.<\/li>\n\n\n\n<li>Other major initiatives include <strong>Digital India<\/strong> <em>(to transform India into a digitally empowered society and knowledge economy)<\/em>, <strong><a href=\"https:\/\/www.nextias.com\/blog\/skill-india\/\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/blog\/skill-india\/\">Skill India<\/a><\/strong><em> (to train people in different skills)<\/em>, <strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/30-03-2022\/the-startup-india-initiative\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/30-03-2022\/the-startup-india-initiative\">Startup India<\/a><\/strong> <em>(to build a strong ecosystem for nurturing innovation and startups in the country),<\/em> <strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/27-09-2022\/8-years-of-make-in-india-programme\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/27-09-2022\/8-years-of-make-in-india-programme\">Make in India<\/a><\/strong><em> (to encourage companies to manufacture their products in India), <\/em><strong>Innovation Fund<\/strong> <em>(aimed at encouraging entrepreneurship and innovation in the country)<\/em>, and <strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-04-2022\/bharatnet-project\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-04-2022\/bharatnet-project\">BharatNet<\/a><\/strong><em> (to grow rural broadband penetration)<\/em> etc.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Forward (Policy Shift: Striking a Balance)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Stricter Regulations:<\/strong> The government is contemplating stricter regulations for e-commerce players. While growth is fantastic, it shouldn\u2019t come at the cost of the well-being of others. There is a need to <strong>balance growth with consumer safety.<\/strong><\/li>\n\n\n\n<li><strong>Fair Play and Transparency:<\/strong> The Union Trade Minister wants <strong><a href=\"https:\/\/www.nextias.com\/blog\/foreign-direct-investment-fdi\/\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/blog\/foreign-direct-investment-fdi\/\">foreign direct investment (FDI) <\/a>and technology<\/strong> to thrive but insists on honesty and transparency. Both <strong>online and offline businesses should play by the same rules.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It\u2019s about finding that sweet spot where progress doesn\u2019t compromise our health and social fabric.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The rapid growth of India\u2019s digital economy, coupled with the increasing internet penetration and the rise of the mass consumer segment, is set to propel India to become the <strong>world\u2019s third-largest ecommerce market by 2030.<\/strong><\/li>\n\n\n\n<li>It presents a tremendous opportunity for businesses and investors alike, making India one of the most attractive markets for ecommerce in the world.<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/m.economictimes.com\/news\/company\/corporate-trends\/will-goyals-concerns-of-ecomms-making-india-a-couch-potato-push-new-policy\/articleshow\/112731243.cms\" target=\"_blank\" rel=\"noopener\">Source: ET<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, the Union Trade Minister stirred up debate on India\u2019s e-commerce sector, instead of celebrating its exponential growth, he expressed concern.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-28151","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/28151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=28151"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/28151\/revisions"}],"predecessor-version":[{"id":28546,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/28151\/revisions\/28546"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=28151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=28151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=28151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}