E-Commerce in India despite rapid growth faces several challenges - CII-Deloitte

The growth of the e-Commerce industry has been triggered by increasing internet and smartphone penetration in not only metro cities but also in tier two & three cities of India. Mobile devices are further expected to drive sales via e-Commerce platforms over the next 5 years.

The e-commerce space, which has rapidly evolved in the country, continues to face several challenges in the areas of taxation, logistics, payments, Internet penetration and skilled man power.

According to a CII-Deloitte report on e-commerce in India, the lack of uniform tax structure leads to issues such as double-taxation or impediments in the free flow of goods across the country. The report believes that the Goods and Services Tax (GST) is expected to help overcome these challenges through a uniform tax structure. Clearly defined rules for e-Commerce transactions in GST and a consultative approach while framing these rules will be favourable to both, the Government of India as well as the e-Commerce companies.

In addition, e-commerce companies face increasing logistics costs related to last-mile delivery, especially on account of return orders. The report believes that e-commerce companies require innovative and analytical-driven models to focus improve on operational efficiencies in the logistics value chain.

As the digital eco-system evolves in India, the e-Commerce companies on their part need to continually innovate, embrace digitisation and analytics to remain relevant. Further, to differentiate, the e-Commerce companies will have to in parallel, focus both, on business-as-usual and also on disruptive growth towards building legacy firms.

1. "E-commerce will continue to Boom in India: Online spending to increase by 67% in 2015"
2. "India is one of the fastest growing e-commerce market in Asia-Pacific region; will reach $6 billion by 2015"

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