India - Commercial Guide
eCommerce

Describes how widely ecommerce is used, the primary sectors that sell through ecommerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of ecommerce in the local market with a list of reputable, prominent B2B websites.

Last published date: 2020-08-25

Market Overview

eCommerce is India’s fastest growing and most exciting channel for commercial transactions. With the increasing penetration of smartphones, internet access and rising digital payment India’s eCommerce revenue is estimated to grow from $48.5 billion as of 2018 to $200 billion by 2026. The current digital revolution in the country is expected to increase India’s total internet user base from 636 million as of 2019 to 829 million by 2021.  India’s internet economy is expected to double from $125 billion as of 2017 to $250 billion by 2020.

 Source: https://www.ibef.org/industry/ecommerce.aspx

Assessment of Current Buyer Behavior in Market:

In the last few years eCommerce has significantly changed the consumer’s shopping habits.  In addition to growing internet penetration, consumers are primed to increase their online purchases because of other barriers like heavy traffic, low product variety, lack of inventory, and inability to compare prices.  

Government Initiatives & Foreign Direct Investment (FDI)

The Reserve Bank of India (RBI) has allowed "inter-operability" among Prepaid Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up cards. RBI has also instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, and interoperability achieved via Unified Payments Interface (UPI).

According to the India Brand Equity Foundation, the Government of India (GOI) has increased maximum FDI participation by foreign companies to 100 percent in the eCommerce marketplace model (B2B model).  Another important initiative is to upgrade the 5G network for which the GOI has allocated $1.24 billion to provide broadband services to tier 1, 2 & 3 cities in India.

In 2018 the Department for the Promotion of Industry and Internal Trade under the Ministry of Commerce (DPIIT), introduced additional guidelines that govern foreign direct investment in eCommerce firms.

A marketplace eCommerce entity shall not own or exercise control over the goods sold on the platform. Any ownership or control over the goods sold by the marketplace entity will render the entity into an inventory-based model.  The inventory of a vendor will be deemed to be controlled by the eCommerce marketplace entity if more than 25 percent of the purchases of the vendor are from the marketplace entity or its group companies. The 25 percent cap was already in place, but the onus of ensuring it, is now firmly on the eCommerce platform,

Exclusivity:

The new norms also bar exclusive tie-ups between eCommerce entities that follow the 'marketplace model' and sellers using their platform. An eCommerce entity is prohibited from directing a seller to exclusively sell only on one platform. 

 Services Offered by the eCommerce Entity:

In a marketplace model, the eCommerce firm is not allowed to directly or indirectly influence the sale price of goods or services and is required to offer a level playing field to all vendors. Services offered by the eCommerce entity are to be offered to all vendors on the platform in a fair and non-discriminatory manner and at arm's length basis. These services include quick delivery, logistics, warehousing, advertising, marketing, payments facilitation and financing.

Compliance Certificate:

The Press Note has introduced a new requirement for all eCommerce marketplace entities to furnish to the Reserve Bank of India an annual certificate along with a report of a statutory auditor, confirming compliance with the guidelines.

You can find additional resources using the following links:

 

Local eCommerce Sales Rules & Regulations

Goods and Services Tax (GST) registration is required to do business in India. Due to ongoing government initiatives supporting the digital revolution, it is easy to set up your business in India. There is a demand for high quality international products and services through the online medium.

As an international brand, one needs to take a longer-term view and have modest expectations for the first 2-5 years.  Ensure you are selling the right products at the right price. You would need an Indian entity with GST registration to sell online in Indian market. International companies can either set up their own Indian entity or partner with an Indian company (Distributor or Importer) that can navigate the complexity of the market.

The Ministry of Commerce and Industry – Department of Commerce regulates online sales in the Indian market.

Local eCommerce Business Service Provider Ecosystem

In the new digital economy, third party service providers can help bridge seller capability gaps. They can provide services such as imaging, cataloging, enhanced brand content, account management, advertising, international shipping, domestic transportation, advertising, and taxes to enable quicker access to the online ecosystem.  U.S. firms already selling products through other channels can pursue online sales using such services.  Another option is to access the Amazon Service Provider network

Popular eCommerce Sites

B2C: Flipkart, Myntra, Jabong, Amazon, Snapdeal, PayTM, Shopclues, Pepperfry, Tata Cliq, Jio Mart, Grofers, Zomato, BigBasket, Alibaba

B2B: Tolexo, Industrybuying, moglix, msupply, amazonbusiness

Major Buying Holidays:

  • Diwali festival (October or November of the year)
  • Dussehra (October)
  • Rakhi festival (August)
  • Christmas (The last week of December)

 COVID-19 Impact on Indian eCommerce Sector

As the coronavirus pandemic continues to wreak havoc across the globe disrupting lives and economies, online marketplaces report an unprecedented spike in demand.  This change in consumer behavior is expected to remain beyond the pandemic.

(Source: www.indiainfoline.com )

 Trade Shows / Conference:

Meet Magento India: eCommerce conference

Venue: Mumbai - India

Date: may be virtual for 2020

 

India Ecommerce Expo (IEE): Conference

Venue: Bangalore- India

Date: may be virtual for November 2020

 

More on India eCommerce:

 For more information about export opportunities in this sector contact U.S. Commercial eCommerce industry specialist Smita Sherigar