Commerce ministry’s 100-day agenda roadmap for the new government includes plans to harness E-Commerce for export. India set a target to achieve USD 1 trillion in merchandise exports by 2030, identifying cross-border e-commerce as a key strategy to achieve this goal.
100-day agenda in E-Commerce
- 100-day Agenda: This is the programme to developing e-commerce hubs to support online exports is a key focus of the government’s 100-day agenda.
- The Commerce Department works with the Department of Revenue on duty-free returns and faster customs clearances.
- Economic Potential: In 2023, the cross-border e-commerce trade was about USD 800 billion and is estimated to reach USD 2 trillion by 2030.
- China’s e-commerce exports are about USD 350 billion, whereas India’s shipments through online medium is only USD 2 billion.
- Return Logistics Challenge: In e-commerce, about 25 per cent of goods are re-imported.necessitating duty-free imports for these items.
- Identifying these items for duty-free status is challenging.
E-Commerce
- E-commerce involves buying and selling goods and services over the Internet.
- As of 2023, India ranks as the eighth-largest e-commerce market globally.
- E-commerce encompasses a broad spectrum of activities, ranging from online retail platforms that facilitate the purchase and sale of products, to digital payment systems that enable secure and convenient financial transactions.
Classification
- The Market-based Model: It involves an e-commerce entity providing an IT platform to connect buyers and sellers, exemplified by companies like Amazon and Flipkart.
- The Inventory-based Model: It entails an e-commerce entity owning and directly selling goods and services from its inventory to consumers, as seen with platforms such as Myntra and Nykaa.
- Foreign Direct Investment (FDI) is not permitted in inventory based model of e-commerce.
- Current Status: India’s e-commerce platforms achieved a significant milestone, hitting a Gross Merchandise Value (GMV) of USD 60 billion in fiscal year 2023, marking a 22% increase from the 2022.
- The export of India’s toy story has grown at nearly 30% Compound annual growth rate (CAGR) over the last seven years.
- In the fiscal year 2022-23, the Government e-marketplace (GeM) achieved its highest-ever Gross Merchandise Value of USD 2011 billion.
- As of 2023, the e-commerce sector in India is valued at USD 70 billion, constituting approximately 7% of the country’s total retail market.
- India has approximately 800 million internet subscribers, including about 350 million mature online users actively engaging in transactions.
- Future Potential: The Indian e-commerce industry is projected to reach USD 300 billion by 2030.
- Third-party logistics providers are anticipated to manage approximately 17 billion shipments within the next seven years.
- It is anticipated to surpass the United States, becoming the world’s second-largest e-commerce market.
- The e-retail market in India is projected to surpass USD160 billion by 2028.