Major Developments In The Indian E-Commerce Sector

Rajan Sarma
Rajan Sarma

The e-commerce market has transformed the way businesses operate in India. It is expected to grow up to U.S $200 billion by 2026 owing to the increase in internet and Smartphone penetration. As of December 2018, the number of internet users in India stood at 604.1 million which is expected to rise up to 829 million by 2021. India's E-commerce economy is expected to double up in the near future, at an annual rate of 51 percent which is the highest in the world.

Spurred by rising Smartphone penetration, launch of 4G network and increasing consumer wealth, online retail sales in India is expected to grow by 31 percent pioneered by Flipkart, Amazon India and Paytm Mall. The dominant contributor in the online retail sales as of 2018-19 was the Electronics market with a share of 48 percent followed by Apparel at 29 percent.

Government Initiatives:
Since 2014, the Government of India has initiated a number of schemes and programs namely, Digital India, Make in India, Startup India, Skill India and Innovation fund to encourage the growth of E-commerce market in India. The Government of India hiked the limit of Foreign Direct Investments(FDI) to 100 percent in B2B models in order to increase the number of foreign players in the Indian online market. The effective implementation of such programs is likely to support the E-commerce sector in the country. Apart from the investments made in FDI, the Union Budget of 2018-19 includes an allotment of rupees 8000 Crore to Bharat Net project. The allocated funds will provide broad band services to 150,000 Panchayati Raj villages.

Under the digital India initiative, the Government had launched a number of initiatives such as Udaan, Startup India portal among many other such programs for the growth of E-commerce startup space in the country. Similarly,under "Udaan" an online B2B trade platform launched by the government of India, has enabled small and medium sized manufacturers to not only connect them with wholesalers and retailers but also provide valuable logistical, payment and technology support.

Private Investments:
In the upcoming years the e-commerce marketplace is expected to boom exponentially in the South East Asia and Asia Pacific region.
The projected digital buyers are expected to cross the 1 billion mark. India is emerging as the fastest growing e-commerce market in the entire Asian region. Smart investments by private players supported by startup friendly policies and initiatives propelled by the Government of India are the two major contributors for the exponential growth of e-commerce sector. Flipkart is expected to launch more offline stores in India to promote products related to fashion and electronics. Flipkart is considered to be the dominant player in the Indian e-commerce market space. Like Amazon they too had started out by selling books online and later expanded to other categories such as electronics clothing mobile phones and any product comprehensible to the mind.

Paytm has recently launched Paytm payment bank, India's first bank with zero charges on online transaction, no minimum balance and free virtual debit card. Reliance Industries has also launched its own online retail stores, currently limited to online groceries and electronics. Online grocery is growing rapidly as its market share doubled from 2016-2018, suggesting that the consumers are getting more comfortable in ordering their essential needs online. e-commerce startups which enable the users to use their social media platforms to buy and sell products and services are gaining a lot of popularity. For instance, India's biggest online supermarket Big Basket not only provides a wide variety of gourmet and imported products but also ensures the farmers are paid well for the products they procured. India which previously had few e-commerce startups established is now witnessing small, medium and big e-commerce startups crop up left and right, battling out against each other for the apex position. E-commerce industry in India witnessed 21 private equity and venture capital deals worth US$ 2.1 billion in 2017 and 40 deals worth US$ 1,129 million in the first half of 2018-19 alone.

The future that lies ahead!
The Indian E-commerce industry has immensely impacted the micro, small and medium enterprises for the good by providing means of financing, technology and training. The Indian e-commerce industry is expected to surpass U.S.A to become the second largest e-commerce market in the world by 2034. Innovations like digital payment, local logistics, and digital advertisements will boost the growth in this sector even further. With the overwhelming penetration in the internet and smart phones these new age innovations are not only giving emerging startup a new platform but it is also proving out to be level playing ground for the companies. Most importantly, the e-commerce industry is likely to increase employment opportunities, increase revenues for export increase in tax collection and provide better services to its customers in the long run.

Major Developments In The Segment:
•As of 2014, the Government of India has introduced a number of schemes like Make in India, Startup India, Skill India and Innovation Fund along with many other initiatives, with a view of giving a boost to the startup ecosystem of the country.
•With the increased number of private investments and the lending of support by the Government, India emerged as one of the fastest growing e-commerce market in Asia.
•As with the sector exhibiting a growth rate of 51 per cent, the country's revenue from this space is expected to grow multifold and touch the mark of USD 150 million by 2020.
•Currently, the retail e-commerce segment is witnessing at least 1-1.2 million transactional activities every day.