Tag Archives: 100% FDI to fuel the next phase of growth

100% FDI to fuel the next phase of growth

Ecommerce Association of India (ECAI) welcomes the government’s decision for allowing 100% FDI in marketplace eCommerce. This is certainly a way forward in fuelling the growth of eCommerce in India. 

India has seen a very high growth in the marketplace eCommerce, which has in turn thrived many new manufacturers, traders and suppliers providing them limitless market with larger customer base. The industry has seen numerous success stories of startups and entrepreneurs and unabated growth. And, moreover, the government’s support and regulation shall make the growth process long-lasting and more stable.

With 100% FDI on the cards, the marketplace eCommerce companies expect to see a larger influx required for the next phase of growth. Existing marketplaces would grow bigger and the newer marketplaces may come up. We may also see niche marketplaces coming up and ultimately everything will lead to bigger opportunities for the sellers. The move will allow more capital infusion in the sector from the foreign investors and the same can be used for financing their development needs.

The marketplace model has been a big driver of growth for the small businesses which again has been on the priority list of the government. Many young entrepreneurs have benefitted from the marketplace model with the large market reach and larger customer base. They are now able to access a pan-India market which was not possible earlier for a small business with very low or zero marketing budget. Since the marketplace manage the entire logistics of sales and even return, the small businesses do not have to invest or manage the same. The marketplace model has also increased the efficiency of the small businesses. With almost 350 million internet users and almost 800 million mobile users and that too a considerable number using smartphones, it offers even a larger opportunity for the eCommerce companies.

Equitable growth

Though the honeymoon discount period may gradually fade away, but the growth will now be more structured and equitable among players. The sales shall also be not discount-driven, and this would be good for the smaller players with less funding support. They would not have to follow the discount race, as they do not have large bellies to do that. So, things will gradually fall in line in the larger interest of the industry.
The marketplace model also compliments the brick and mortar stores. Of late, the physical stores have also got a larger bandwidth of market space through eCommerce. They are now able to sell to a larger number of customers, and also the eCommerce players are also going offline.

The era of discounting will gradually be corrected, and this will certainly give more opportunities for the brands to reach out to larger pool of young customers through the online marketplace. Hence, the role of eCommerce players become even more important, as they have a huge young customer base following. Also, the rise of mCommerce has given rise to a convenience marketplace where anything and everything can be sold at the convenience of customers.

The government has been looking forward to support the growth of eCommerce industry and we are hopeful that we would see more such pro-industry moves by the government for the sector that has been the largest employment generator for the economy in the last five years. The eCommerce sector has also given rise to a more structured and organised businesses, as all the transactions are recorded. This helps in checking tax evasion and illegal transactions.

Also, with the government’s focus on building a strong manufacturing base in India, eCommerce can play an enabling role for manufacturers and suppliers to access the consumer base. With the borderless market, the manufacturers and suppliers can access any regional market and even global market as well.

(The author is the secretary general at e-Commerce Association of India)

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