E-commerce sector in India is set to witness a phenomenal growth of over 50 per cent in the next five years due vast internet penetration, predicts the Economic Survey 2014-15, tabled in the Parliament on Friday by Finance Minister Arun Jaitley.
The annual government document, however, highlighted the concerns over consumer safeguards and proposed changes to the Consumer Protection Act.
As per industry body Internet and Mobile Association of India (IAMAI), as on October 2014, India had 278 million internet users.
On the hurdles being faced by the retail sector, media reports quoting the Survey said: "Inventory management, logistics planning and resource availability are important hurdles for online retail in India," further adding, "Consumer safeguard being another concern for consumers of eCommerce, the government proposes including sufficient provisions in the ongoing amendment to the Consumer Protection Act, 1986."
Prime Minister Narendra Modi had set up a Task Force last year to give suggestions to drive up revenues of India Post in with various services including eCommerce. The Task Force, which submitted its report in January this year, recommended setting up a holding company under the Department of Posts to roll out of banking, insurance and e-commerce services by the world's largest postal network.
According to consultancy firm PwC, the eCommerce sector has grown by 34 per cent (CAGR) since 2009 to touch USD 16.4 billion in 2014 and is further expected to touch USD 22 billion in 2015.
In order to boost growth in the sector, India had allowed 100 per cent FDI in single-brand retail in 2012 with a requirement of 30 per cent of items sold to be sourced from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors.
In the multi-brand segment, 51 per cent FDI was allowed by the earlier UPA government with conditions that companies entering the segment must source 30 per cent preferably from local small and medium enterprises at the time of start of business.
However, the new NDA government had said that they would not allow FDI in the multi-brand retail.
"We are clear that FDI will not be allowed in multi-brand retail trade in line with the position the BJP had articulated in its manifesto on the basis of which we won the elections," Commerce and Industry Minister Nirmala Sitharaman had earlier said.