Dr S Raghunath, Professor, Corporate Policy & Strategy, calls for reduction in broadband cost and improvement in network infrastructure
India's e-commerce industry has been rapidly growing over the last five years, thanks to rising disposable incomes and easier access to the internet. The broad range of products that retailers, such as Flipkart or Snapdeal, offer with discounted prices and their easy payment options have made them huge hits in India, especially with younger consumers.
India's e-commerce industry is estimated to have grown more than 30% from a year earlier to $12.6 billion in 2013. India has long been very protective of its retail industry, which is mostly made up of tiny mom and pop shops that cannot compete on price.
One school, led by e-commerce entrepreneurs, argues that FDI would boost infrastructure development and manufacturing, result in more efficient supply-chain management and reduce costs. However, another school cautions that FDI in the sector may lead to multinationals dumping their cheaper products on the market causing a negative impact on the Indian manufacturing sector in general, and to micro, small and medium enterprises in particular. It thinks that small-time businesses or 'kirana' stores would likely be seriously hurt, leading to large-scale unemployment.
Dr. S. Raghunath weighs in on this debate.
E-commerce currently accounts for only a fraction of India's retail industry, estimated at an annual $490 billion. Foreign money coming into the e-commerce sector will certainly boost the capital-intensive industry which has been struggling to raise funds to facilitate expansion and attain economies of scale, won't it?
Yes, funds from outside the country can facilitate expansion. For e-commerce to thrive, one of the fundamental requirements is the penetration of the internet. Current estimates are that it reaches 13 per cent of the population. The second issue is even if domestic e-commerce spreads, the language of communication has to be predominantly vernacular and not English. The third issue is for the illiterate population in the country, visual or voice activated applications will encourage them to utilize the net for ecommerce. The fourth is the access to financial inclusion apps. With more number of e-commerce offerings and increased traffic on the net better bandwidth and speed are clear requirements as there is almost 50 per cent increase in demand, year on year. However, unless we successfully reduce the cost of broadband in India we will not attract the masses. Broadband in India has to reduce to one-fourth of the current costs to be at par with other BRIC countries like Brazil and China.
One section of the domestic e-commerce industry believes that foreign capital in the inventory-led e-commerce industry may be allowed in financial form; not in strategic form. What is your view?
Three significant developments can change ecommerce customer behaviour - one, the ease with which people can access information through conveniently accessible sites; two, the improvements in network infrastructure, and three, reliability and speed of delivery. Global e-commerce companies have a lot to offer in all these dimensions.
In India, the e-commerce industry is plagued by problems in technology infrastructure and physical infrastructure (logistics and distribution). What role can regulations play here? And how?
Continuing access to global organizational networks will be essential in reaching the technology enabled infrastructure goals of India's national strategy, but access alone will not be enough. The strategy must pursue a national environment that will encourage competition. India's strategy should promote two mutually reinforcing components of co-operative competition. First, the cyber security and e-commerce strategy should build on the framework of co-operative competition in the development, integration and co-ordination of technology and physical infrastructure. Second, the e-commerce strategy should reinforce co-operative competition through multinational institutions and regimes that emphasize the key role of market forces.
The over-arching mission of co-operation should be to strengthen institutions and interventions from the government that promote e-commerce in remote parts of the country and promote equal access to economic markets.
Would you say allowing FDI will positively impact infrastructure development in the country?
Yes, the impact will be positive. Google and Microsoft have initiatives in other countries to boost internet access to reach the masses. A group of companies have launched Internet.org to provide connectivity to the unconnected 5 billion.
Dr S Raghunath, Professor, Corporate Policy & Strategy, calls for reduction in broadband cost and improvement in network infrastructure
India's e-commerce industry has been rapidly growing over the last five years, thanks to rising disposable incomes and easier access to the internet. The broad range of products that retailers, such as Flipkart or Snapdeal, offer with discounted prices and their easy payment options have made them huge hits in India, especially with younger consumers.
India's e-commerce industry is estimated to have grown more than 30% from a year earlier to $12.6 billion in 2013. India has long been very protective of its retail industry, which is mostly made up of tiny mom and pop shops that cannot compete on price.
One school, led by e-commerce entrepreneurs, argues that FDI would boost infrastructure development and manufacturing, result in more efficient supply-chain management and reduce costs. However, another school cautions that FDI in the sector may lead to multinationals dumping their cheaper products on the market causing a negative impact on the Indian manufacturing sector in general, and to micro, small and medium enterprises in particular. It thinks that small-time businesses or 'kirana' stores would likely be seriously hurt, leading to large-scale unemployment.
Dr. S. Raghunath weighs in on this debate.
E-commerce currently accounts for only a fraction of India's retail industry, estimated at an annual $490 billion. Foreign money coming into the e-commerce sector will certainly boost the capital-intensive industry which has been struggling to raise funds to facilitate expansion and attain economies of scale, won't it?
Yes, funds from outside the country can facilitate expansion. For e-commerce to thrive, one of the fundamental requirements is the penetration of the internet. Current estimates are that it reaches 13 per cent of the population. The second issue is even if domestic e-commerce spreads, the language of communication has to be predominantly vernacular and not English. The third issue is for the illiterate population in the country, visual or voice activated applications will encourage them to utilize the net for ecommerce. The fourth is the access to financial inclusion apps. With more number of e-commerce offerings and increased traffic on the net better bandwidth and speed are clear requirements as there is almost 50 per cent increase in demand, year on year. However, unless we successfully reduce the cost of broadband in India we will not attract the masses. Broadband in India has to reduce to one-fourth of the current costs to be at par with other BRIC countries like Brazil and China.
One section of the domestic e-commerce industry believes that foreign capital in the inventory-led e-commerce industry may be allowed in financial form; not in strategic form. What is your view?
Three significant developments can change ecommerce customer behaviour - one, the ease with which people can access information through conveniently accessible sites; two, the improvements in network infrastructure, and three, reliability and speed of delivery. Global e-commerce companies have a lot to offer in all these dimensions.
In India, the e-commerce industry is plagued by problems in technology infrastructure and physical infrastructure (logistics and distribution). What role can regulations play here? And how?
Continuing access to global organizational networks will be essential in reaching the technology enabled infrastructure goals of India's national strategy, but access alone will not be enough. The strategy must pursue a national environment that will encourage competition. India's strategy should promote two mutually reinforcing components of co-operative competition. First, the cyber security and e-commerce strategy should build on the framework of co-operative competition in the development, integration and co-ordination of technology and physical infrastructure. Second, the e-commerce strategy should reinforce co-operative competition through multinational institutions and regimes that emphasize the key role of market forces.
The over-arching mission of co-operation should be to strengthen institutions and interventions from the government that promote e-commerce in remote parts of the country and promote equal access to economic markets.
Would you say allowing FDI will positively impact infrastructure development in the country?
Yes, the impact will be positive. Google and Microsoft have initiatives in other countries to boost internet access to reach the masses. A group of companies have launched Internet.org to provide connectivity to the unconnected 5 billion.