Towards Digital Atmanirbharta

Context: Challenges faced by the growing e-commerce sector shall be addressed to fulfil the dreams of Atmanirbhar Bharat.

Factors pushing for the growth of e-commerce sector in India:

• Government’s impetus on digital literacy.
• Increasing penetration of internet and smartphone users.
• Manufacturers are allowed to sell their goods through e-commerce without any restriction.

Significance of the e-commerce sector:

• Future of retail shopping: It is estimated to become a $100 billion industry by 2024, which was at $38.5 billion until 2017.
• Ensuring essential delivery: E-commerce emerged as an enabler in ensuring the availability of essentials to the masses amid the pandemic.
• Supports small businesses: E-commerce provides them with the means to access a much bigger market without having to overly invest in marketing.
  • With GST and the drive towards digitisation, more small traders need to be enabled to make the transition and take advantage of the expanding opportunities.
• Benefits consumers: by reducing costs and providing options.

Challenges faced by the e-commerce sector:

• Lack of Investor-friendly environment: Majorly because of differences between the FDI policy in e-commerce and FDI policy on trade. For e.g. -
  • FDI policy in cash and carry or wholesale B2B operations is different (100% FDI allowed under automatic route) compared to highly restrictive FDI policy on retail B2C trade.
  • An artificial distinction was created between single-brand retail and multi-brand: 100% FDI is allowed under automatic route in single-brand retail whereas FDI regime in multi-brand retail is quite restricted. E-commerce is not allowed under FDI policy in multi-brand retail.
  • Lack of specific policy on FDI in e-commerce for exports.
• Over-regulation: Apart from FDI Policy/ Foreign Exchange Management Act (FEMA), other laws such as Information Technology Act, Consumer Protection Act, and those pertaining to Intellectual Property and copyright regulate the e-commerce sector in India.

Way forward:

• Create a comprehensive FDI policy on trade:  that takes care of the needs of all the stakeholders: producers, consumers, service providers in the supply chain and small traders. 
  • Public policies should provide an enabling environment and a level-playing field to promote and nurture competition and protect the interests of all. 
• Expand the bandwidth of operation: by adding more and more foreign markets to the e-commerce sector to augment the sales of small business.
• Ensure harmonious working of online and offline retailers.