E-commerce in India

The cutting edge for business today is e-commerce. Most people think e-commerce means
online shopping. But web shopping is only a small part of the picture. The term also refers to online
stock, bond transactions, buying and downloading software without ever going to a store. In addition,
e-commerce includes business to business connections that make purchasing easier for big corporations.
E-commerce is generally described as a method of buying and selling products and services
electronically. The main vehicle of e-commerce remains the Internet and the World Wide Web, but use
of e-mail, fax and telephone orders are also prevalent.
Electronic commerce is the application communication and information sharing technology among
trading partners to the pursuit of business objectives. E-commerce can be defined as modern business
methodology that address the needs of the organization, merchants and consumers to cut costs while
improving the quality of goods and services and speed of service delivery. E-commerce is associated
with the buying and selling of information, products, services via computer networks. A key element of
e-commerce is information processing.
The effects of e-commerce are already appearing in all areas of business, from customer service
to new product design. It facilitates new types of information based business processes for reaching and
interacting with customers-online advertising and marketing, online, order taking and online customer
service etc. It can also reduce costs in managing orders and interacting with a wide range of suppliers
and trading and trading partners, areas that typically add significant overheads to the cost of products
and services.
Gartner Group predicted in April 2001 that the B2B e-commerce in the Asian and Pacific region
will reach US$ 220 billion this year, which will be 24 per cent of the worldwide total. In the year 2000,
this figure was US$ 96.8 billion or 22 per cent of the worldwide total. In the year 2005, the Asian and
Pacific region will account for 28 per cent of the worldwide B2B e-commerce transactions, which itself
will grow to US$ 2.4 trillion (People’s Daily Online, 7 April 2001).
A recent report of eMarketer released in May, 2001 says that the number of Internet users in the
Asian and Pacific region will increase dramatically from 48.7 million in the year 2000 to 173 million in
the year 2004. It will then comprise more than 27 per cent of the global Internet user community
compared with 21 per cent in the year 2000. The same report estimates the number of Internet users in
India will be about 5.8 per cent of the total number in the Asia-Pacific region (eMarketer, 10 May 2001).
It is against this backdrop of the world at large and Asia-Pacific in particular that we have to
examine the developments in India. The Government of India has long recognized the need for development
of IT industry and information infrastructure as these are twin engines for growth of the economy.
Deeper penetration of IT applications in the economy, and in the society as a whole can help boost the
economy. E-commerce applications can make it easier for the country to better integrate with the global
markets, the e-marketplace. This has led the government, over the last few years to formulate liberal
policies for the development and growth of the IT industry.
The IT sector as a whole has grown at a compounded annual growth rate of about 30 per cent
every year for the last few years. The total production during the current year, i.e. 2001-2002 was
Rs 809 billion (US$ 17.3 billion), out of which software exports account for Rs 3,655 billion (US$
7.8 billion).

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