e-commerce in Indian economy – Notes for UPSC IAS

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E-commerce Notes for UPSC
  • Users up to 40 million in 2016.
  • It’s fast becoming m-commerce than ecommerce.
E commerce notes for UPSC

The risks of e-commerce are

• Internet security where private information can be misused by unverified sites

• counterfeit goods cam be sold due to multiple vendors on a single site

• change in terms and conditions which are not disclosed properly

• Cyber security as no proper steps taken by banks and retailers to prevent hacking.

• Selling of medicines online has also generated controversy. The high regulations by FDA and failure of customers to upload prescriptions has led to cancellation of online deliveries by many companies. In 2015, Drugs Consultative Committee DCC has formed a committee to deal with this issue after chemists and druggists submitted a memoramdum.

• Losses of ecomm companies mounting as they were selling products below cost price in order to attract loyal customers. But they are now facing pressure from the investors as they are wanting a return on their investments.

• People generally prefer normal buying because bargaining can be done to retail as well as credit system is available in rural areas

• Taxation challenges

• Opposition from brick and mortar retailers.

Advantages of e-commerce in India

• High choice to customer at one click

• No brick and mortar establishment needed

• Retailers get more customers as they get connected via these sites.

• White money used in online transaction

E-Commerce Policy Notes for UPSC

• 100% FDI allowed in market place format of e-commerce by automatic route. FDI not allowed in inventory-based e-commerce where company itself owns the inventory and sells it to consumers.

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• It defines marketplace as the platform where retailers and buyers interact with help of technology including warehouses, offices, collection points, etc which can also spur real estate development in office segment.

• It put restrictions on ecommerce saying they can’t do anything that can directly or indirectly influence prices and also to ensure a level playing field. So earlier, retailers used to make available their products cheap on ecommerce sites due to coercion but now they cant. This will lower the discount sales that were offered. But the flip side is that who will decide the market price and what exactly constitutes influencing the prices?

• Restriction that an ecommerce company can’t buy more than 25% from a vendor and related companies. This will reduce discounts as bulk sales will reduce.

• Overall, level playing field aimed. But consumers will suffer and brickmortar retailers will benefit.

• The wide range of restrictions and ambiguous language will open doors for litigation and also misuse through discretion.

• Goes against Ease of Doing Business motto and is also killing the ecommerce industry that is expected to grow and create jobs. (quote stats).

• Data is anational resource hence the data generated from domestic transactions should be made secure

• Infra status to the digital infrastructure for e-commerce

• Concept of permanent establishment to be used to determine taxation issues

Video on new rule for e-commerce