E-commerce market in India may touch $100 billion by 2020

New Delhi: E-commerce market is likely to grow ten-fold in next five years to reach USD 100 billion on the back of increasing penetration of Internet, smartphones and spread of digital network in rural areas, DIPP Secretary Amitabh Kant said Tuesday.

According to a report titled 'Direct selling; Mapping the industry across Indian states', the country's e-commerce sector, which is around USD 10 billion (Rs 65,000 crore) at present, can even touch USD 250 billion in next ten years as digital network would spread in the rural areas.

"By end of the decade, by 2020, e-commerce would be USD 100 billion industry... Presently China has a USD 450 billion e-commerce (market) and India is just USD 10 billion.

"India in next 10 years, in my mind 10 years, would be close to USD 250 billion of e-commerce," DIPP Secretary Amitabh Kant said while releasing the report on direct selling by industry body FICCI and consultancy firm KPMG.

This boom will happen because the broadband would take over and digital network will spread into the rural areas, Kant added.

According to him, e-commerce market would be driven by the local languages and broadband Internet penetration into rural India.

By 2017, India will have 350 million smartphones and it will create demand, the report said.

Meanwhile, e-retailing and various other formats of retail such as direct selling could co-exist and grow as there are several models growing in retail across the world.

"We would see several trends growing, while e-commerce has mushroomed in India recently... By 2017, we would have 500 million Indians connected to Internet and it would create huge consumer opportunity," Kant said.

India will also witness rapid urbanisation and create an economy driven by the middle class.

"By 2030, we would have 350 million people moving from rural to urban areas and by 2050, 700 million people would move to urban areas... By 2025, India's middle class would drive India's 50 per cent economy," he said.

The state governments should follow the drafted guidelines on direct selling to bring clarity in the sector, Kant added.

According to the report, direct selling in India has grown at a CAGR of 16 per cent over the past five years and is presently at Rs 75 billion.

However, "the market grew at a lower rate of 4 per cent in 2013-14 due to slowdown in the industry", the report said.

It added that there are several factors such as fly-by-night ponzi and pyramid schemes that are often confused with direct selling. Lack of a clear definition of the industry and centralised regulations are hampering the growth of the sector.