According to Gartner, India represents a $7 billion e-commerce market, growing at more than 40% every year. While meeting their own set of challenges and opportunities, e-commerce players are expecting a support from government in the upcoming union budget 2016 announcements.
Implementation of Goods & Service Tax (GST)
CouponDunia’s Chief Operating Officer, Ankita Tandon expects amoother tax structure for e-com players as well as implementation of GST by 2016.
“The upcoming budget should look aim at simplifying the tax structure for the e-commerce sector. The government should also look at zeroing in some ground rules in order to boost the e-commerce sector. The budget should also look to roll out the implementation of GST by 2016,” said Tandon.
“As promised in the Union Budget of 2015, implementation of GST from April 2016 will help e-commerce companies rationalise supply chains by addressing taxation issues,” she added.
Startup India, Standup India funds
Vineet Singh Co-Founder & CEO of Buildzar.com feels that ecommerce player and startups faces a challenge of access to capital.
“Too much money too early in the game is instigating excessive burning of cash. Online marketplaces operating in niche segments generally have five to six well-funded players battling it out for business. This is leading to tight competition in prices and pushing the margins to almost nothing,” he explained.
“The Indian Government should also provide clarity on how it is planning to use the Rs.10,000 crore fund it had earmarked for the program “Startup India, Standup India” in 2014.
FDI in e-commerce
Tandon said that government of India should also allow 100% FDI for e-commerce to move ahead of competition. Foreign investors can make strategic investments in smaller online retailers.
Reiterating him, CouponDuniya’s Tandon said, “E-commerce companies expect ample Foreign Direct Investments, which will ensure huge growth, faster building of logistics and better funding option.”
According to Sanjeev Mohanty CEO & MD of Jabong, as e-commerce in India continues to grow and the Tier 1 market saturates, players will look at Tier 2 and Tier 3 cities to reach out to the next set of audiences. “This will require better and improved logistics such as increase in the number of warehouses, reliable transportation and postal infrastructures,” he said.
“For most Indian players, product differentiation does not come into play as much as the discount factor does. Though highly competitive, this approach does not help in establishing a loyal customer base as the audience is most likely to go where they see better discounts. In order to ensure the sustainability of the e-commerce sector, it is important for the players to work on product differentiation. There needs to be long-term clarity on the future of FDI in retail. Tax irregularities bundled with lack of clarity on FDI can seriously hamper the e-commerce boom,” Mohanty elaborated.