Major Developments in the Indian E-commerce Sector and the Initiatives Taken by Govt to Promote E-commerce

Electronic Commerce, most commonly known as e-commerce has been transforming the way business is done in India for the last decade. E-commerce in India can be roughly categorized as domestic and overseas, B2B and B2C, inventory-based and marketplace. The country’s e-commerce market which was US$ 38.5 billion in 2017, is expected to grow to US$ 200 billion by 2026. Currently, electronics is the biggest contributor to online retail sales in the country with a share of 48%, followed by apparel at 29%. The industry’s growth can be attributed to the increasing internet and smartphone penetration and most importantly, the initiatives taken by the Government promoting digitization.

Propelled by the ongoing digital transformation, India is expected to witness a significant increase in its total internet user base of from 604.21 million as of December 2018 to 829 million by 2021. Government reports suggest that India’s internet economy will have a twofold growth by next financial year, majorly backed by e-commerce.

Government Initiatives

Since 2014, the BJP-led Central Government has launched numerous initiatives including Make in India, Digital India, Start-up India and others that directly or indirectly promote e-commerce. The following are some of the major initiatives taken by the Government to boost the e-commerce industry:

  • Government increased the foreign direct investment (FDI) limit in e-commerce up to 100%. This encouraged foreign players to invest more in e-commerce in the Indian market.
  • The proposed heavy investment of around $14 billion by the Government to roll out the fiber network for 5G.
  • Internet connectivity in local bodies in every Panchayat through BharatNet project.
  • Drafting of national e-commerce policy, incorporating inputs from several industry stakeholders. The Government is planning to implement the policy soon to facilitate achieving holistic growth of the industry.

Major Developments in the Indian E-commerce Sector

  • India is witnessing the emergence of online retail eco-systems, led by Flipkart/Walmart, Reliance, Alibaba, Amazon and Future Group.
  • The mobile wallet transactions propelled by online shopping in India increased to ₹3,000 billion in FY18 from ₹200 billion in FY16.
  • Flipkart acquired Israeli analytics firm Upstream Commerce in last September. The move helped Flipkart to price and position its products more efficiently.
  • The launch of Paytm Payment Bank helped in attracting online buyers. It is India’s first bank that enables online transactions with zero charges and no minimum balance and provides free virtual debit cards to customers.
  • Tata Trust and Google are collaboratively helping improve internet penetration among rural women through the project ‘Internet Saathi.’
  • The Indian e-commerce industry witnessed 21 private equity and venture capital deals to the tune of US$ 2.1 billion in 2017 and 40 deals to the tune of US$ 1,129 million in the first half of 2018.
  • Currently, more than 75,000 exporters from India are exporting their goods to overseas countries via e-commerce.
  • Due to increased awareness and rising income levels, the appetite for international brands by the Indian online shoppers is growing rapidly which is attracting more foreign retailers to invest in the Indian e-commerce market.


The growth in e-commerce has brought a revolution in the Indian retail industry and is unstoppable now. Today, we have the fastest growing online retail market among leading global economies. The rapid growth in the industry has been driven by the Government’s initiatives, aggressive discount-driven online marketplaces, improved delivery infrastructure and increased smartphone penetration. The sector’s growth will play a major role in India’s growth story going forward.

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