The e-retailer's wish list for Union Budget 2017-18

With the government stepping up focus on economic reforms and development, everyone is eagerly awaiting the Union Budget 2017-18. Among the key sectors that are expecting major policy changes is the e-commerce industry.
The e-retailer's wish list for Union Budget 2017-18

With the government stepping up focus on economic reforms and development, everyone is eagerly awaiting the Union Budget 2017-18. Among the key sectors that are expecting major policy changes is the e-commerce industry. E-commerce players have done quite well, as can be seen from their current double-digit CAGR of 11%. The phenomenal rise of e-commerce in India has been driven by continuous innovation, technological advancements, high-end & disruptive data analytics, and the ability to scale and sustain. From the current market size of around USD 20 billion, it is expected to touch USD 101 billion by 2020, which would be a massive five-fold increase at a CAGR of 34%. With so much market potential to be tapped, it is imperative that the government would have to bring about favorable policy changes to help boost e-commerce growth.

The people of India have a penchant for shopping and the online experience is a dream come true for most of them. They now have the means to browse through millions of products and place their order with the utmost ease and peace of mind. The total number of online shoppers is expected to reach 220 million by 2020 from just 39 million in 2015, at a CAGR of 41%. With rapidly growing internet connectivity and the rising number of mobile users, e-retailers have been able to target an ever-increasing market base, spanning Tier II and Tier III cities and various other smaller towns. As per a recent report, more people in India will gain access to Internet in the next 15 years, as compared to any other country. This is a major plus for e-retailers, as they can continue to rev up their growth engines for more than a decade. However, for that to happen, some major reforms need to be introduced by the government. Many of the current taxation and documentation laws are archaic, which do not fit the highly complex world of e-commerce. 

Talking about the good and bad of e-retailing and his expectation from the Union Budget 2017, PankajBansal Founder and CEO of said, “No doubt, the market potential is huge, and it is also true that we have been consistently adding new customers. However, there comes a point when the growth plateaus, something that is imminent if the existing market variables remain unchanged. To jump over to the next level, e-retailers like us will have to cut costs, capture new geographies, and streamline our operations. Many of these objectives can be achieved only if the government supports us through favorable, pioneering reforms that complement the dynamic nature of the e-commerce sector. I am hopeful that the government has discussed the challenges faced by e-retailers and has preparedsome good plans for us in the forthcoming budget.”

Implement GST: The implementation of Goods and Services Tax (GST) has been one of the key demands of e-retailers. GST is being touted as a game changer for the e-retailing industry, as it would enforce a single comprehensive indirect tax structure on the sale and supply of goods and services, applicable in all States of the country. At the Central level, it will replace the central excise duty, service tax and additional customs duty and at the State level, it will replace VAT, CST, entry tax etc. E-commerce players will benefit via:

·         Simplified taxation laws and increased transparency encompassing State borders

·         Efficient utilization of the supply chain

·         Elimination of occurrences of double-taxation

·         Improved logistics with fewer hassles and reduced costs

·         Sourcing, distribution and warehousing strategies based on business objectives rather than reducing taxes

GST was making decent progress, but after the government's demonetization move, certain States have taken a rigid stand over some of the tax rates proposed under the GST Act. It will require a lot of political maneuvering to get the GST rolled out in 2017. However, as it is hugely beneficial to States, the hopes are high for its smooth implementation.

Increase Internet penetration: While Internet connectivity is adequate in major towns and cities, a large chunk of the country's landscape still lacks this technology. The rural areas are especially deficient in Internet access, a problem that needs to be addressed. Internet speed is another factor that needs to be considered, as browsing and digital transactions require high-speed internet connectivity. The government should introduceaffordable Internet plans via the government owned BSNL or provide incentives to private players to set-up their networks in areas that lack Internet connectivity.

Improve synergy between government agencies: There needs to be improved synergy between various government departments and agencies. It would help achieve faster turnarounds, improve efficiency and bring about increased transparency for all stakeholders in the e-commerce ecosystem.

Create a consulting body: Understanding the dynamics of the highly complex and rapidly evolving e-commerce sector may be difficult for policy makers. To ensure that policies reflect the true nature of the e-commerce sector, a consulting body needs to be created at the national level. Such an entity would comprise government officials, trade bodies, industry associations, and representative from e-commerce companies. It would hold periodic reviews and discussions, based on which, a uniform and favorable e-commerce ecosystem can be created.

Launch training & skill development programs: The e-commerce industry has created significantemploymentopportunities for both blue-collar and white-collar professionals. With rapid growth, the industry has felt an increased demand for trained and skilled professionals in areas such as logistics, analytics, pricing, inventory management, transportation, last-mile delivery etc. To meet this demand, specialized training and skill development programs involving government and private players can be introduced.

Improve logistics infrastructure: The government should step up its focus on infrastructure development, modernization of road, rail, sea and air transportation and building cost-effective warehousing facilities. It would help e-commerce players to tap new markets and improve efficiencies.

Introduce a robust cyber-crime policy: With the rise in internet connectivity, cases of cybercrime have also risen in the country. E-retailers and online shoppers are among the ones who have been significantly affected. Lack of advanced cyber forensic tools, coupled with weak cybercrime laws, hasresulted in low conviction rate, something that reduces its deterrence capability. Strict and fool-proof cybercrime laws will be a big relief to e-retailers and online shoppers.

Introduce a comprehensive law to address counterfeiting:Counterfeitingof branded products is turning out to be a big menace for e-retailers, as it gives a bad name to their brand. Strict laws need to be introduced to check counterfeiting and other similar crimes.

The article has been pen down by Pankaj Bansal, Founder and CEO, 

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