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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.