 "E-commerce: A sunrise sector, purveyor of India's economic growth")
India is the world’s fastest-growing large economy, and being considered the engine of global growth, accounting for about 15 per cent of global growth, according to the International Monetary Fund.
Prime Minister Narendra Modi recently spoke about how India is on a path of “sustained high growth” with robust economic fundamentals. He also marked the 21st Century as ‘the India’s Century’.
As India is poised to become the third largest global economy this decade, we see an aspirational boom in various industries and sectors of economy. e-commerce is one of them, which also acts as a purveyor of growth, facilitating and democratising manufacturing and marketing. In a recent report titled ‘SPURring growth in FMCG, retail and e-commerce sectors in India’, Deloitte projects India’s e-commerce CAGR to be 21 per cent and expected to reach $325 billion by 2030.
E-com: A booster for growth
As per the recent data from the Ministry of Statistics and Program Implementation (MoSPI), the first half of 2024-2025 saw a dip in economic growth. The economists and policy makers all stress that there is need to install a few boosters to thrust on growth opportunities with quicker returns.
E-Commerce is one such low hanging fruits which has great potential to give a throttle to economic growth with its all-round linkages with various sectors, digitisation and expanded internet access. The number of internet connections in India stood at 895 million in June 2023. The smartphone base is expected to cross 1.1 billion by 2025. This has boosted India’s digital sector, expected to reach US$ 1 trillion by 2030.
If we look around, China is a case in example which rose rapidly as the world's manufacturing factory on the back of its e-commerce. China is a forerunner in global e-commerce business with an annual growth rate measured in CNY of 9.9 per cent.
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India’s Digital India Mission has completed more than nine years, positioning the country as a leading digital economy. The digital infrastructural development provides a conducive environment for growth of e-commerce. InvestIndia, in its report titled “India to become world’s third largest e-commerce market by 2030” asserts that rural India will lead this growth as rural-centric e-commerce would rise by 2026. According to GlobalData’s E-Commerce Analytics, India’s e-commerce market is projected to rise from Rs 12.2 trillion ($147.3 billion) in 2024 to Rs 24.1 trillion ($ 292.3 billion) by 2028.
MSME sector flourishes
The Indian MSME sector has seen a great surge from evolution of digital markets and e-commerce, which has resulted in creating a level playing field, new job opportunities for the youth, lower costs of doing business, and obliteration of geographical barriers. It provides livelihood and new aspirations to the rural population by providing marketing avenues to local artisans, craftsmen and women entrepreneurs.
The e-commerce models empower women-led businesses, unlocking, untapped potential of women in business. There are many success stories of enterprises driven by women leveraging e-commerce through unique marketing support, in India and global markets, as also support in skill development.
According to this year’s Economic Survey, MSMEs accounted for nearly 70 per cent of India’s e-commerce sales in 2021 and 40 per cent of exports, contributing 6.22 per cent of GDP. The number of online shoppers in India is projected to increase significantly, with a compound annual growth rate (CAGR) of 22 per cent to 88 million in rural India, and 15 per cent to 263 million in urban India, between 2019 and 2026. To support their growth, it’s essential to focus on capacity building, skill development, increased investments, and reduced regulatory burdens, enabling MSMEs to innovate and compete globally. The collaboration between the Ministry of Skill Development and India’s largest e-commerce enterprise, Flipkart’s Supply Chain Operations Academy (SCOA) works on training the workforce for competitive digital markets.
Convenience to customers
E-commerce offers unparalleled convenience to consumers as well, allowing them to shop anytime, anywhere, without the need to visit physical stores. With a vast range of products and services available online, consumers can compare prices, read reviews, and make informed purchasing decisions. It also prevents search costs as consumers can choose and buy products virtually.
E-commerce platforms often provide personalised recommendations based on user preferences, enhancing the shopping experience. There are few innovative AI bots now, to assist users like Flipkart’s ‘Flippi’ and Amazon’s ‘Rufus’. They provide virtual assistance, address customer grievances and enhance consumer experience by making these platforms more interactive and user friendly.
Another significant benefit is cost savings both for businesses and consumers. Online platforms offer exclusive deals, allow consumers to compare prices across multiple vendors and help find the best prices. Easy return policies and doorstep delivery further add to the convenience, making e-commerce a preferred choice of consumers. The rise of UPI like Google Pay, Phone Pe, etc. has made e-commerce extremely convenient for the common man.
Overall, e-commerce is a sunrise sector which has yielded best results for our growing economy. E-Commerce will act as a catalyst and booster for India’s “Make in India” initiative, enabling the Indian players to compete globally and contribute to sustainable growth. The growth in both B2C and B2B will contribute to the country’s GDP. The way forward is a strategically planned regulatory framework that enables fair competition and foster innovation. (With inputs from Subhi Pastor)
The writer is the chairman of Competition Advisory Services India LLP. He has earlier served as the first chairman, Competition Commission of India and executive director at the World Bank for India, Sri Lanka, Bangladesh and Bhutan.
Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper