E-Commerce Surge in India

A report by Invest India said India’s e-commerce landscape is poised for a monumental gain by 2030.

E-commerce in India:

• By 2030, India is projected to become the third largest online retail market globally.
• The sector was valued at $70 billion in 2022, making up about 7% of India’s total retail market.
• The digital economy is on track to expand to $800 billion by 2030.

E-commerce Models

• Inventory-Based Model: Here, the inventory is owned by the e-commerce entity selling directly to consumers. Foreign Direct Investment (FDI) is not allowed in this model.
• Market-Based Model: This model serves as a platform connecting buyers and sellers and permits 100% FDI under the automatic route.

Drivers of E-commerce

• In 2022, 52% of Indians had internet access, making India the world’s second-largest internet user base with 881 million users.
• Notable infrastructures include eKYC and Unified Payments Interface, which facilitated $1.5 trillion in transactions in 2022.
• More than 60% of e-commerce demand is expected to come from tier 2-4 towns and rural areas of India by 2026.
• It is projected that over 80% of the Indian population will own smartphones by 2026.
• Approximately 73% of internet users prefer content in Indian languages, engaging a user base of 540 million.
• By 2025, 87% of Indian households are expected to have internet access, with the cost of 1 gigabyte of data at approximately $0.17.

Key Challenges

• Challenges include digital divides, piracy, issues with counterfeit products, and domination by foreign entities like Amazon.

Trends

• The market size is expected to grow to $5.5 billion by 2025.
• Government Initiatives include the Government e-marketplace (GeM) with a Gross Merchandise Value of $2011 billion in FY 2022-23, Jan Dhan Yojana, and the BharatNet Project.

Ref: Source