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E-commerce Market in India

GS-3 Mains : Economy

• Current Market Size: $70 billion (7% of total retail market)
• Projected Growth: $325 billion by 2030
• Digital Economy: Expected to reach $800 billion by 2030
• Online Shoppers:
  • Rural: 88 million by 2026 (CAGR 22%)
  • Urban: 263 million by 2026 (CAGR 15%)
  • India to surpass US in online shoppers soon
• GMV (Gross Merchandise Value):
  • $60 billion in FY 2023 (22% increase)
  • Projected to reach $160 billion by 2028
• Rise of Digital Economy:
  • 2nd largest internet user base globally (over 900 million)
  • 3rd position in online retail by 2030
  • 87% internet penetration expected by 2025
  • 21% rise in mobile internet access since 2019
• Mass Consumer Role:
  • Key driver of growth ($135 billion by 2030)
  • Income range: INR 2.5 lakh to INR 10 lakh
  • Households engaging in e-commerce: 120-130 million by 2030 (80% driven by mass consumers)

Challenges in India’s E-commerce Market:

• Digital Infrastructure & Internet Penetration:
  • Disruptions can harm trust and lead to transaction failures.
  • Significant rural population lacks internet access.
• Platform Neutrality & Fairness:
  • Concerns about unfair terms, exclusive contracts, price parity restrictions, and deep discounts.
• Taxation:
  • Unfavorable carry-forward of losses and unclear withholding tax norms.
• SME Inclusion:
  • Separate infrastructure, distinct terms, and costs across platforms create barriers.
• Regulatory Challenges:
  • Data protection, consumer protection, taxation, and other legal compliances.

Initiatives to Address Challenges:

• Policy Support:
  • 100% FDI allowed in B2B e-commerce and marketplace model.
• Government e-Marketplace (GeM):
  • Facilitated government procurement exceeding INR 4 Lakh Cr GMV.
• Open Network for Digital Commerce (ONDC):
  • Aims to empower MSMEs and democratize e-commerce.
• Other Initiatives:
  • Digital India, Skill India, Startup India, Make in India, Innovation Fund, BharatNet etc.

Conclusion:

Despite challenges, India’s growing digital economy, internet penetration, and mass consumer segment position it to become the world’s 3rd largest e-commerce market by 2030, making it highly attractive for businesses and investors.