E-Commerce in India: Challenges and Choices

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This paper discusses the global developments in e-commerce and opportunities for India. It discusses the IT revolution, impact of E-Commerce and potential gains India can make in the global business. E-commerce is a fast moving area internationally in terms of opportunities and technologies. It is predominantly lead by industry and user sector with government playing a catalytic role providing proactive support and facilitating critical inputs for growth. India is known to have missed Industrial Revolution of free market economies of the 1970's and 1980's. This paper discusses the challenges that India needs to address to be competitive in the area of e-commerce.

INTRODUCTION

The world is witnessing successive milestones of ongoing digital revolution. The digital revolution leading to information society is silently but surely triggering transformation of social infrastructure within the nation for its socio-economic development as well as acting as a vehicle to integrate itself as a part of global networked/digital economy. While there is no single globally accepted definition of E-Commerce, it is gradually leaning towards goods and services transacted over internet. Countries are cautious not to exclude (i) pre-internet era electronically based transaction as well as (ii) the new possibilities in the future (IEEE, 1999). A more accepted definition could be the one accepted in the WTO Ministerial Declaration on E-Commerce "the production, distribution, marketing, sales or delivery of goods and services by electronic means" (WTO, 1999). Electronic Commerce is a phenomenon, which is drastically reshaping the parameters of trade. It is the exchange of goods and services across electronic networks, especially the Internet. Electronic Commerce in a sense has been around for last two decades in some form or the other but the spread of internet has become a new force in driving E-Commerce. Six main instruments of electronic commerce have been recognized by WTO and the same are telephone, fax, TV, electronic payment & money transfer systems, electronic data interchange and Internet. Generally speaking, E-Commerce refers to Internet business wherein goods and services are traded on the net. Goods could be tangible goods involving physical transfer or intangible ones like information, music, or software involving digital transfer.

E-Commerce is thus a new way of conducting, managing and executing business transactions using modern information technology. The internet provides access 24 hours a day, seven days a week any time anywhere. Thus, time and place are no longer the binding factors. Electronic Commerce builds on the structures of traditional commerce by adding the flexibility offered by electronic networks. This facilitates improvement in operations leading to substantial cost savings as well as increasing competitiveness and efficiency through the redesign of traditional business. Essentially there are two types of e-commerce viz., Business to Consumer (B2C) and Business to Business (B2B). Although business to business commerce on the net is growing, the use of internet to bring E-Commerce to the individual consumer has been a relatively new development. Thus, one may see that e-commerce is fundamentally about new business models and value propositions. E-Commerce is a Social System Infrastructure (as called by Japanese) which integrates business, consumers, service sector, and government at large.

It was National Information Infrastructure initiative of the United States conceptualized in 1992-93 and launched in September 1993, which propelled the growth of E-Commerce ( U.S. Government, 1999). The concept of convergence, seamless digital connectivity, and bandwidth availability preceded the demand. The internet as infrastructure with low tariff stimulated the demand. Rapid sophistication in technology and application developments propelled the internet world wide in a short period of 7-8 years. …