E-commerce is set for rapid growth in India

November 1, 2017

NEW DELHI - India’s e-commerce development has lagged far behind that of China andr Southeast Asian countries like Singapore and Malaysia, but the gap has started to show signs of narrowing in the wake of pro growth economic policies adopted by the Modi Government. Swift e-commerce development in India is being facilitated by a phenomenal surge of internet usage, says a new research report from the Hong Kong Trade Development Council.

“For many years, development of e-commerce in India has been hindered by backward infrastructure, spanning telecommunications, mobile internet, land transportation and general logistics arrangements,” the report says.

“Internet access was particularly limited in rural areas across most of the country, where the bulk of India’s population lives.

“The retail landscape, however, has changed drastically since 2016, not with a revival of the mall boom evident in the early part of the decade, but with a new wave of retail market transformation, prompted by bold policy-making by the Modi Government and radical change in the telecommunications sector.”

The report says that, as in many developing countries, a major impediment to e-commerce market development in India is the low usage of digital payments as a result of both supply and demand constraints.

“India has always been a cash dominant economy, with cash payments constituting more than 95% of all transactions prior to 2014. The landslide election victory for Narendra Modi in that year, however, saw formation of a Government with a strong mandate to push through forward-looking, if controversial, economic and social policies. 

“Modi is a tech-savvy Prime Minister who has made digitising India one of his major objectives in his drive to reform India. Modi strongly believes that digital governance will systemically modernise India’s economy, reforming the bureaucratic apparatus that is often seen as a prime obstacle to growth, while effectively addressing tax evasion, corruption and red tape.

“In the three years of the Modi Government, India’s optical fibre network has grown to more than 2 million km from less than 400 km in 2013-14, paving the way for Indian service companies to chart their digital strategies and for more and more Indians to adopt a new digital way of life.”  www.hktdc-research@hktdc.com  (ATI).