The biggest support these enterprises need is in their marketing, access to domestic and international markets, and handholding, wherein e-commerce steps in a big way. India has witnessed a historic boom in internet and smartphone penetration. As of June 2023, the number of internet connections in India significantly increased to 895 million, driven by the ‘Digital India’ programme. Out of the total internet connections, 55% were in urban areas, of which 97% were wireless. The smartphone base has also increased significantly and, buoyed by cheap data, is expected to reach 1.1 billion by 2025. This has helped India’s digital sector, expected to reach $1 trillion by 2030.
This rapid rise in internet users and smartphone penetration coupled with rising incomes and newer applications has boosted the growth of India’s e-commerce sector. India’s e-commerce sector has transformed the way business is done in India and has opened various segments of commerce ranging from business-to-business (B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C), and consumer-to-business (C2B). Major segments such as D2C and B2B have experienced immense growth in recent years. India’s D2C market is expected to reach $60 billion by FY27. In the Economic Survey, the CEA has emphasised the significant potential of the Open Network for Digital Commerce (ONDC), stating that the growing realisation of digital infrastructure’s potential positions ONDC to elevate small enterprises into major market players. While it was mentioned in the context of ONDC, it is equally applicable for other major e-commerce players.
India’s consumer digital economy is expected to become a $1 trillion market by 2030, growing from $537.5 billion in 2020. E-commerce exports in India are estimated between $4 billion and $5 billion, accounting for over 1% of the country’s total merchandise exports, in 2023, but expected to surge to over $10 billion soon.
The recent EY-Assocham Report highlights the need for growing e-commerce exports by rationalising payment reconciliation costs, streamlining customs procedures, facilitating express export movement, and setting up e-commerce export hubs, which figures under the government’s commitment in the Foreign Trade Policy. These export hubs are slated to be set up near airports and seaports as part of the government’s 100-day agenda.
As asserted by the CEA, no economic approach will be excluded, we need manufacturing and exports, all combined. In fact, as evidenced by the impact of growing e-commerce in several advanced economies, e-commerce benefits the economy in multiple ways, including the expansion and diversification of consumer spending, like mobiles, air conditioners, refrigerators, and other appliances, further benefiting both manufacturers and retailers. With its wide penetration across the country supported by the digital stack, e-commerce helps in multiple ways, giving greater choices to consumers with easy access, inflation control, and stabilisation of prices. It also helps in employment generation, improving the quality of life, and better planning on their expenditure for lifestyle and durable goods. It also helps in other sectors like agriculture, in promoting inputs and better marketing in India and abroad. With push and pull factors and increased demand for computers, mobile phones, smartwatches, and infrastructural tools, it also supports other consumer durables and service industries, including education and healthcare.
E-commerce has come to occupy an integral place in day-to-day life at present, and needs government support in various ways, including in regulations, logistics, infrastructure, digital laws, prevention of cybercrime, cross-border e-commerce trade provisions in bilateral agreements, etc. As India races to become a developed nation by 2047, it is important that we gear up to meet the newer challenges.
(Dhanendra Kumar has served as the first Chairman of the Competition Commission of India, Executive Director at the World Bank for India, Sri Lanka, Bangladesh, and Bhutan. He is currently Chairman of Competition Advisory Services India LLP (COMPAD). With inputs from Varun Singh, Associate, COMPAD)
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper.
First Published: Jul 22 2024 | 9:06 PM IST
