To say that the growth of Indian ecommerce has been remarkable would be an understatement. With each passing year, this industry has grown manifolds and has managed to surpass expected growth rate much before the predicted timeframe.
Ecommerce bringing order to chaos
Ecommerce is largely responsible in bringing a sense of order and organizing many unorganized sectors such as retail, real estate and other service oriented businesses. For instance, the hope to systematize severely unorganized retail industry was pinned on powerhouse brands such as Tata, Birla, and Reliance. They did succeed to an extent. But it was ecommerce players that ended up being the game changers.
Sustaining the growth
Rising popularity and potential is there to see for all. Now comes the part of sustaining it. And that requires more sound investment and supportive economic policies in favour of online ventures.
Close to $25 billion is required to feed ecommerce industry in order to sustain the development in the next 5 years. The money needs to be utilized for augmenting logistics & delivery, customer service, building warehouses & data centres and focusing on product development and technology. This in turn would create employment opportunities for a large chunk of people contrary to the belief. To be precise, 700000 jobs directly, besides millions more that will benefit indirectly over the next 5 year according to a report.
Where will the money come from? Yes, from foreign investors who are more than willing to pump money in this industry.
As of now there are various restrictions when it comes to FDI. And not to forget the tax irregularity woes slapped on many ecommerce companies like Flipkart, Amazon. This can hamper the flourishing ecommerce industry. Several observations and study indicates that Indian ecommerce needs FDI. And clarity over tax and regulations is another thing that needs to be out as soon as possible. An RBI report stated, “The rapidly growing e-commerce could contribute to states’ revenue efforts, provided there is greater clarity in rules and procedures to enable better compliance.”
The existing laws are outdated and restrictive whereas ecommerce is a new segment that needs a modern outlook. This issue needs to be debated and researched substantially before taking the decision. Whether 100% FDI in online retail should be allowed or not is still under debate. The positive thing is that the Indian government acknowledges the potential of ecommerce and is thinking about keeping separate FDI policy for online and offline platform. But what ultimately the government decided to do will be hopefully revealed in the coming months.