Indian ecommerce to hit USD 50 bln by 2020 - report

According to the company, the ecommerce sector in India is well placed for significant growth, driven by the countries favourable demographics, multi-fold rise in internet penetration and scarce organised retail. The same source mentions that initial issues like consumer acceptance, lack of credit and debit card penetration and challenge of last-mile delivery are being overcome as industry has responded with solutions like cash-on-delivery and specialised e-logistics companies.

Research also unveils that investors’ worries about ecommerce are misplaced. The supply-chain for offline retail by category implies adequate margins for e-tail in the future. The study further points out that e-tail in India is at a nascent stage and companies are trying to ‘Get-Big-Fast’, helped by capital availability.
With regard to risks, UBS indicates that current regulations governing foreign direct investment (FDI) in retail has some constraints on multi-brand retail, which has led to the marketplace model as the preferred one for e-tailers in India.

Also, e-tailers in India have faced some tax issues recently, including at state-level value added tax even for their marketplace model. According to data, the introduction of a single Goods and Services Tax, a major reform in the Indian tax system, can help take care of some of these concerns, as it is a value-added based tax system.