INDIA – Economic impact of Ecommerce to touch USD 100 billion by 2015 – Digital Commerce to grow 33% in 2013

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According to a recent report by Economist Intelligence Unit (EIU), commissioned by the Asia Internet Coalition, Internet-based businesses such as online advertising and e-commerce are slated to touch $100 billion size by 2015.

“Even in India, where only 10 per cent of the population is online, 1.6 per cent of GDP is attributed to the rise of the internet. This is expected to double by 2015 to be worth $100 billion — the same size as the nation’s healthcare industry today,” the report said. It added that one of the key factors that will drive the Internet economy in India is digital and mobile advertising.

The report ‘Good to Grow: The Environment of Asia’s Internet Business’ said that at present, advertising revenue in India is at 7 per cent but out of the $410 million being spent online, 60 per cent goes to Google and Facebook, with only the remaining 40 per cent going to other online players.
But the report raised concern on low level of credit card penetration in India checking growth of e-commerce”. On both fronts, India stands at an abysmally low penetration of 2 per cent compared to South Korea, Taiwan and Singapore.

The report underlines the issue of Internet legislation in India and points out that poorly worded or confusingly interpreted pieces of legislation (notably those in India and Thailand) create uncertainty for business owners, as well as high administrative costs in order to put safeguards in place.

According to the latest Digital Commerce Report, by the Internet and Mobile Association of India (IAMAI) and IMRB International, released last May, online travel, which includes booking rail, air, bus tickets, hotel accommodations and tour packages comprised a majority 71 per cent of the whole Digital-Commerce pie in 2012, Online retail, which includes purchases of various consumer goods such as electronics, apparels, footwear, jewellery, home & kitchen appliances, consumer durables, furnishings, constituted 16 per cent of the overall share. According to the report, the online travel industry has on an average grown by 32 per cent from 2009 to 2012 and is estimated to grow by another 30 per cent by the end of December 2013. Online retail has grown over 300% between 2009 and 2012. This category is estimated to grow by 55 per cent by the end of 2013.

The report “Good to Grow” by the Asian Internet Coalition is available on request.

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