India’s e-commerce market on a rapid growth track

As Internet penetration in India is on the rise, the e-commerce sector in the country is likely to witness a growth of over 50 percent in the next 5 years, says the latest Economic Survey. The government document raises concerns about consumer safeguards and proposed amendments to the Consumer Protection Act. “India's e-commerce market is expected to grow by more than 50 percent in the next 5 years,” the Economic Survey 2014-15, tabled in Parliament by Finance Minister Arun Jaitley, said.

As per industry body Internet and Mobile Association of India (IAMAI), as of October 2014 India had 278 million internet users. On the hurdles being faced by the sector, the Economic Survey said, “Inventory management, logistics planning and resource availability are important hurdles for online retail in India. Consumer safeguard being another concern for consumers of e-commerce, the government proposes including sufficient provisions in the ongoing amendment to the Consumer Protection Act, 1986.”

According to the Task Force report, set up by Prime Minister Narendra Modi set up last year to suggest measures to drive revenues of India Post with various services including e-commerce. The Task Force, in its report submitted in January this year has recommended that there is a need of setting up a holding company under the Department of Posts to roll out of banking, insurance and e-commerce services by the world's largest postal network.

The Task Force report added that rural India should be the main target area. India has a postal network of over 1,55,015 post offices of which (89.76 percent) are in the rural areas. According to consultancy firm PwC, the e-commerce sector has grown by 34 percent CAGR since 2009 to touch 16.4 billion dollars (over Rs 1,01,400 crores) in 2014 and is further expected to touch 22 billion dollars (over Rs 1,36,000 crores) in 2015.