Ecommerce growing at about 17% in 2018-19

Backed by increasing digital connectivity, rising awareness and improving affordability, the ecommerce market in India has emerged as one of the largest and fastest-growing in the world. While India’s retail market is expected to increase by 60 per cent to reach US$1.1 trillion by 2020, the nation’s ecommerce sales are expected to reach US$120 billion by 2020 from US$33 billion in 2016. This has generated great volume of investor interest. To encourage investors, Government of India has amended foreign investment (FDI) policy to allow 100 per cent foreign investment in online retailing of products.

Opening up of markets into Tier-2, Tier-3 cities and beyond has further boosted investment. Additionally, India’s ecommerce market is expected to reach US$220 billion in gross merchandise value and 530 million shoppers by 2025. To ride this growth, while Walmart is looking to launch a total of 50 new stores across India by 2025, Amazon is aiming to invest at least US$5 billion in its India business as well as an additional US$500 million in the country’s food retail operations. As part of their expansion, foreign companies have also prioritised on local sourcing of products they sell and the technology they use.

Going ahead, the Indian ecommerce market has reached US$38.5 billion, after growing at a rate of about 17 per cent in the fiscal 2018-19, as per the National Association of Software and Services Companies (NASSCOM) Strategic Review 2018. Moreover, an entity has been permitted to undertake retail trading through ecommerce under the following circumstances, subject to FDI policy provisions:

• A manufacturer is permitted to sell its products manufactured in India through ecommerce
• A single brand retailer operating on brick and mortar stores can undertake ecommerce trade
• A food retailer can undertake retail trading of India-produced products, including ecommerce