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Question

How e-Commerce had transformed the retail trade in India and critically analyze the impact of the draft e-Commerce policy on digital economy


Solution

Approach:
  • Give an overview of the e-Commerce in India.
  • Enumerate the impact of the e-Commerce on the Indian economy.
  • Mention the special features of the draft e-Commerce policy.
  • Discuss the impacts of the policy on the Indian economy.
  • Provide a balanced conclusion.
e-Commerce:
e-Commerce is the process of buying and selling of goods and services through the medium of internet. It has transformed the way business is done in India. Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to 200 billion USD by 2026. Electronics is the biggest contributor to online retail sales in India with a share of 48 per cent, followed closely by apparel at 29 per cent in India.

Impact of e-Commerce on the Indian economy:
e-Commerce takes different forms depending on the relation between the Government, Business and Customer like G2C, B2B, B2C, and G2B among others. Some of the impacts of the e-Commerce on Indian economy are
  • Development of innovative financial technology.
  • Increase in new age employment opportunities.
  • Building of robust supply chain management.
  • Promotion of entrepreneurship activities.
  • Attraction of foreign direct investment.
  • Better price discovery to customers.
On the other hand predatory pricing by the e-commerce players made the traditional brick and mortar retailers disadvantaged. Hence there is rising demand for the regulation of the discounts given by these deep pocketed electronic retail players.

Draft e-Commerce policy:
Due to the importance of the e-Commerce the Department for Promotion of Industry and Internal Trade (DPIIT) released a draft e-Commerce policy. The main focus of the policy are digital data, domestic industries and consumer welfare. Some of the main focus area of the policy are
  • Ownership and control of digital data generated in India.
  • Domestic industries especially SMEs and startups.
  • Monitoring of cross border imports.
  • Promotion of export activities.
  • Protection of consumer rights.
  • Regulation of FDI in e-Commerce.
  • Regulation of internet of things (IoT) devices.
In addition it proposes to regulate the cross holding of the inventory by the e-Commerce players. Considering the potential and scale of impact of the sector, the policy aims to promote healthy e-Commerce for Indian economic growth.

Impact of the policy on Indian economy:
The draft e-Commerce policy on implementation will create a level playing field among retailers of all sizes. It will ensure that Indian data is not utilized by foreign nations to the disadvantage of the Indian economy and national security. The e-Commerce is the sunrise sector with huge potential in the areas of new employment opportunities, technology developments and consumer satisfaction. The combination of the schemes like Digital India, Make in India and Skill India will further enable the transition of India into digital economy. On the other side significant threat remains in the cybersecurity which has to be given adequate responses.

Conclusion:
In 21st century data is considered as the precious capital for the new age companies. This policy strikes at the right place to protect the huge data generated by the Indian consumers. It protects Indian digital sovereignty and development of domestic industries. The role of the 5G technology will open further new opportunities of business and employment. At the same proper level playing field should be made between the e-Commerce and traditional brick & mortar retailers.

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