Did Budget Meet expectations of the online retail sector?

In last few months ecommerce companies has shown a huge potential not only in terms of engaging consumers to buy products but also by creating employment opportunities in India. With an increase of 10 million unique visitors in last one year, Percentage of unique visitors have grown from 26.1 million in July 2011 to 37.5 million in July 2012 making India one of the fastest growing Internet markets, ranking third among the fastest growing markets worldwide (Comscore).

The size of the e-commerce market (which encapsulates all financial transactions conducted on the Internet) in India for 2012 is estimated to be USD 10 billion and projected to grow at a CAGR of ~45% to reach USD 200 billion by 2020. (Technopak). This growth is bound to happen, but support from government and the allied bodies are needed for the betterment of the online retail industry in the country.

Experts believe that ecommerce has a huge potential to contribute to the economy of our country. Also, that it brings a lot or relief to society as well as to the government, in order to increase the involvement of more and more ecommerce companies in this country Government needs to take some encouraging steps at each stage.

Recently, The US India Business Council in a letter with 23 page detailed memorandum submitted last month before the annual budget  to Union Finance Minister P Chidambaram has also made recommendations to remove the current restrictions in the Foreign Direct sales to consumers by e-commerce and has also asked to allow foreign companies to acquire direct ownership in real estate for investment.

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Depending on how much the government relaxes existing laws, ecommerce companies made their own expectations from the government.

Mukesh Bansal, CEO & Co-Founder, Myntra

We expect the budget to introduce business friendly tax measures and implement GST which will provide strong opportunities for growth across sectors. We also expect the budget to be more progressive, boost infrastructure, especially in Tier 2 & 3 cities and make India a more attractive destination for large foreign investment.

Rajesh Nahar, CEO & Co-Founder, Cbazaar

My expectation would be to reduce the service tax(12.36%) charged by the logistics companies which offers E-commerce transaction fulfillment, this is for the fact that shipping charges are eroding the margins of e-commerce companies and the government should do help these companies in its initial years of operations by providing subsidy on the service tax component.

Sachin Bansal, Co-founder and CEO, Flipkart

The implementation of a uniform GST will go a long-way in improving the ecosystem. Companies will be able to set up the required infrastructure (warehouses, logistics systems) in strategic locations, resulting in cost savings that can be passed on to the end-user.  An efficient supply-chain and logistics system will also require investment from the government. Investing in infrastructure and enabling more efficient connectivity within the country will provide much needed support to existing e-commerce industries and the ancillary SMEs as well.

The focus of our budget needs to be on business friendly taxation policies that allow these industries to scale up and expand faster. SEZs for Data Center Operations, for instance, would be quite welcome. This would reduce the cost of running these centers within India, providing much needed relief to smaller companies who are currently forced to run their operations from international centers due to cost considerations.

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Vishal Mehta, Founder & CEO, Infibeam

I hope the budget brings in faster rollout of GST, inclusivity measures for small and medium sized traders/ retailers to make their products and brand visible to an increasingly growing online audience in India.

Vijay Singh, CEO & Managing Director, Aaramshop

The government needs to frame policies to support and further encourage these start-up initiatives. The biggest area of support required is ensuring increased ease on-ground in accessing debt options from banks with schemes like the Credit Guarantee Scheme and lowering of the rates of interest for the same.

Looking ahead for the ecosystem opportunities Internet Retailing can offer to India in terms of Infrastructure development, Generating employment, upscaling startups scenario, International infusion of funds and more, we will have to wait and watch whether the Government is operating in ground realities for future of India or busy living in its own mess?

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