India is rapidly marching towards becoming a digitally empowered society. The push for e-governance, the proliferation of smartphones, increasing Internet access and booming digital payments are fueling the country’s journey towards a trillion-dollar digital economy by 2025. The widespread acceptance of Digital is being seen as a catalyst for overall economic growth, and with the combination of favorable demographics and policy reforms, India presents a unique and powerful growth story.
With Internet penetration expected to almost double to 60% by 2022, the country is arguably the world’s most promising Internet economy, with a rapidly increasing ‘netizen’ population. With improving data affordability, consumption growth and newer financial products, the e-commerce market is set to grow, be it across e-tail, travel, consumer services or online financial services. From the next set of online shoppers, three out of every four customers are expected to come from Tier II cities or beyond, and a vast majority of them would be less tech-savvy, seek greater transparency from brands and prefer consuming content in local languages.
Note: The income groups are classified as below poverty line (<3.3 k USD), aspiring (3.3 k–7.5 k USD), middle (7.5 k–37 k USD) and affluent (>37 k USD).
Source: IMF, PwC analysis
2017 and 2022E, number of users in million; Internet penetration (% in 2017)
Source: TRAI, CIA World Factbook, analyst reports, secondary research
Note: The mobile Internet users are the wireless Internet users as reported by TRAI.
2016, e-commerce spend per capita and readiness index* (%)
*E-commerce readiness is defined as the cumulative impact (average) of smartphone penetration and GDP per capita.
Note: Bubble size represents the e-tail market size in 2017.
Source: World Bank, eMarketer, secondary research, PwC analysis
E-commerce market – India, FY2012-22E, billion USD
Source: Secondary research, PwC analysis
2012–2022E, million users
Source: Secondary research, PwC analysis
E-commerce is governed by multiple regulatory bodies and several horizontal regulations. There is a need for harmonisation of laws and regulations covering the e-commerce ecosystem, giving them a common definition and intent. A holistic policy framework for e-commerce should be able to, at the same time, adapt to the fast-changing technology and consumer preferences.
The envisaged approach will help in the development of an ecosystem that will support the industry, boost investments as well as protect consumer interest. The framework should also provide for an e-commerce facilitation unit in all relevant government ministries and sectoral departments, which serve as a point of interface for handling issues unique to the e-commerce sector.
A holistic e-commerce framework should encompass the following:
Source: Secondary research, PwC analysis
To overcome these obstacles and turbocharge growth, PwC has proposed a three-pronged approach
1. Enable consumers to transact online effectively
2. Encourage online players through an online-offline parity in regulations
3. Ensure that the supporting infrastructure is capable of managing turbocharged growth