+ E-Commerce in India - CII Blog

The outbreak of Coronavirus, which has limited physical movement due to the lockdown, has turned the spotlight on the digital and virtual.

India, in fact, over the last decade has been evolving into a digitally empowered society. Increasing penetration of smartphones, rapidly increasing internet bandwidth and speeds, propensity for digital payments, favourable demographics and rapidly emerging e-governance standards and policies are accelerating digital growth in India. 

The population of India’s netizens is expected to increase further with easier data affordability. And the pandemic is opening new e-commerce opportunities across e-tail, consumer services and online financial services. With Tier-II cities joining the fray and local language content emerging, the e-commerce market is set to get a fillip. 

To achieve significant growth, given the multiple regulatory bodies and several regulations, India needs to have harmonisation of laws and regulations governing e-commerce to create a holistic ecosystem and adapt to fast-changing technology and consumer preferences. The envisaged building-blocks will need to comprise of robust physical and digital infrastructure, enhanced logistics infrastructure, an enabling network, infrastructure access complete with data protection framework, a level playing field for online and offline taxations and cross-border e-commerce activities. 

Going forward, logistics may prove to be the biggest challenge for e-commerce. Presently, Cash on Delivery (COD) rates are almost 90% in tier-3 and tier-4 cities, as compared to 50% in metros. The Achilles Heel is the return to origin (RTO) rates across India, especially where COD orders are involved. Unless a fix on mounting RTO rates are established, e-commerce, especially in the hinterlands, will upset the apple cart.  Modern logistic partners when combined with modern technologies like artificial intelligence (AI) and machine learning (ML) will enable the reduction in RTO rates and improve efficiency across the country.

In the last few months, due to the outbreak of Coronavirus, while online shopping for basic needs and even medicines has increased, other e-commerce firms dealing with travel and tourism are witnessing severe drops. In fact, the whole ecosystem comprising of taxi drivers, travel agents, hotels and online travel aggregators, has been badly hit. 

The e-commerce sector is estimated to have lost $400 million worth of sales during the last week of March, starting with the ‘junta curfew’ on 22 March. However, due to the recent relaxation in lockdown norms, e-commerce operations are gradually picking up and segments like groceries, personal hygiene and health are expected to grow faster, but they form a very small percentage of the overall Gross Merchandise Value for e-commerce platforms. In the current scenario, CII has suggested to the government to allow e-commerce firms to deliver both essentials as well as non-essentials.

The Department for Promotion of Industry and internal Trade (DPIIT) has already floated the draft national e-commerce policy which proposes the setting up of a legal and technological framework for restrictions on cross-border data flow and also lays out the conditions for businesses regarding collection or processing of sensitive data locally and storing it abroad.

Confederation of Indian Industry (CII) has said that greater clarity is required on data-sharing in the proposed national e-commerce policy as any forced disclosure may raise concerns on privacy. CII is also of the view that the proposed regulations, while desisting from micro-managing e-commerce players, should act as an enabler to promote innovations.  CII feels that the policy should refrain from a one-size-fits-all approach and should consider the diversity of organisations and industries it affects.

In the post-COVID world, e-commerce has a secure place. It has the potential to transform the way people operate, ushering in sweeping changes, especially across rural India.