E-Commerce in India: Challenges and Choices

By Kuthiala, S. K. | Journal of Services Research, October 1, 2002 | Go to article overview

E-Commerce in India: Challenges and Choices


Kuthiala, S. K., Journal of Services Research


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. Online wired world progressed aggressively faster than industrial revolution. Initiatives to develop internet and be competitive with USA were also taken in France, Japan, Korea and Singapore. As far as E-Commerce is concerned, a range of technology developments and business pilot projects were initiated and implemented from 1995 onwards in various stages in USA, Europe, and Japan. India with its brain-power and software eminence among all the Third World nations was not going to be left behind this time. So Ministry of Information Technology carried-out a detailed study to understand these initiatives.

DEVELOPMENTS IN INDIA

Following the above international developments, Department of Electronics (now MIT) in May 1997 formulated an Action Plan for National Information Infrastructure for National Development. Broad components of NIC Action Plan covered national high-speed backbone network, internet and NII, interconnection of networks, PC Penetration and localization of software in Indian languages. Further a commitment was made by government to enhancing computerization, upgrading ERNET, promoting multimedia programs, advancing R&D, generating test beds for technology adoption and flagship applications of NII. For further implementation, goals were set to enhance IT use along with promotion of electronic commerce, domestic and foreign investments, regulatory and legal framework matching international norms.

Anticipating the need to facilitate the growth for e-commerce, DOE/MIT initiated formulation of Cyber Laws in the country. Four international state-of-the-art studies were prepared in key Cyber Laws to draw parallel for India namely, cryptography, IPR, digital signature and computer crimes. A project of Electronic Data Interchange (EDI) to facilitate trade amongst trading partners has been under implementation, using EDIFACT Standards. EDI is the process for exchanging data in electronic formats between heterogeneous applications and/or platforms in a manner that can be processed without manual intervention.

GLOBAL FRAMEWORK FOR E-COMMERCE AND INDIA

In 1997, USA, European Union, Japan and OECD Secretariat put forward proposals to create a global framework for E-Commerce to help ensure that the benefits of the Internet and online Commerce continue to expand to all parts of the global economy (IEEE, 1999). While these proposals were not developed under common terms of reference, nevertheless in general, a consensus emerged that private sector should take the lead role in development of norms on business transactions, taxation and the legal and regulatory framework for E-commerce.

India currently leads globally as the source of low-cost, efficient electronic commerce services. However, the tools of electronic commerce have not been diffused in India through the economy to help improve productivity and promote efficiencies. Other policies concerning the interconnection of networks, the development of the information infrastructure, and low internet penetration present barriers to the growth of on-line businesses and the creation of new "information economy" jobs. The International Conference on E-commerce held in India in 1999 drew upon significant policy work, a white paper on Legal and Regulatory Issues in India, and a country-wide survey on electronic commerce done by India's leading market research organization, IMRB, to provide the relevant data needed to address these issues.

The GIIC electronic commerce project is supported by the GIIC's India Commissioner, Mr. Ravi Parthasarathy of Infrastructure Leasing and Financial Services, and the Confederation of Indian Industry, India's leading industry group. It covered a large number of issues related to development and diffusion of Electronic Commerce and enabling E-Commerce in India. The conference brought together the perspectives of international organizations working on electronic commerce such as the World Bank and the World Intellectual Property Organization, international and India-based private sector companies, as well as the governments of India, the United States, and the European Commission. (GIIC, 2000).

E-COMMERCE IN INDIA

The market potential for E-commerce in India is projected to be Rs.50,000 crore, or $11.9 billion by the year 2002, according to a recent survey done by the Indian Market Research Bureau (IMRB, 2000). The survey also revealed that only 20 percent of the India's 318 major corporations surveyed were currently implementing E-commerce in their operations. Fifty-eight percent of Indian CEO's rated E-commerce as crucial to their growth strategy. It is being anticipated that E-Commerce can contribute up to 20 percent in annual sales to Indian GNP within the next five years. E-Commerce can enable Indian companies to access international markets like never before. However, with telephone density currently at just two telephones per 100 people along with poor information infrastructure and the poor quality of the last mile connection are considered to be major stumbling blocks and impediments in India for international e-commerce. In addition, a lack of awareness of the technology; its short term and long term benefits; low level of employee skills and the absence of a regulatory framework are slowing the uptake of the technology in India. In a survey of Indian households conducted by IMRB, only 26 percent of PC-owners were aware of E-commerce, with the majority of them indicating that they would prefer to not make purchases on-line until quality of products and delivery could be guaranteed. Governmental and private sector participants at the conference, "Enabling E-Commerce in India," held on the 15th and 16th of June, 2000 in New Delhi urged attention to these issues, and recommended that further discussions be held on appropriate legal frameworks needed to promote E-commerce in India. Conference was jointly coordinated by the GIIC, Infrastructure Leasing and Financial Services, the Confederation of Indian Industry and sponsored by the InfoDev fund at the World Bank.

To bolster local E-commerce, India's lower house of parliament approved a new law that creates a legal structure to support online sales. In addition to establishing online trading rules, the legislation changed rules of evidence and banking that relate to E-commerce. This law will permit Indian government agencies to accept electronic signatures and records. According to Reuters, with the new procedures in place, India's Internet watchers predict that local E-commerce has a possibility of growing to nearly $600 million over the next twenty-four months.

The government of India made passage of the bill a primary policy objective over the last year. India believes that E-commerce will enable the country to leverage its strength in software design and engineering and engender huge growth in domestic Internet use. The bill must now be passed by India's upper house and signed by its President. Once the bill is implemented, International Data Corporation predicts that Internet subscriptions in India will grow from one million today to 7.5 million in 2003 and India could become a major international player in E-commerce.

Having missed 25-50 years of high industrial development with socialistic economy, India as one of the largest countries in the world with a significant population of skilled software engineers, India can not afford to miss the second opportunity being offered in the area of Information Technology where the country has developed a niche. E-commerce represents an extremely large long-term opportunity for E-commerce companies not only to sell products but to develop dominance in this field. The country's implementation of a new legal structure for online marketing and sales will enable companies from across the globe to begin to compete for India's online consumers and for India to sell globally its products and services if international business norms and regulations are followed.

The success of E-commerce world wide has led to its implementation in many important business sectors. The ability to conduct critical back office transactions in a fast, secure and reliable way has become a major part of the manufacturing, retail and transportation industries. It is rapidly being adopted in other vertical market sectors. Companies are discovering that E-commerce is where the business is, but getting there requires careful planning. Many sellers have rushed onto the web only to find that they don't know how to make the service pay for itself. Undoubtedly, differentiating a web site from competition and attracting customers by offering added services, and at the same time managing the systems end of an E-commerce calls for special skills. And, as online transactions grow more complex, these challenges will only mount. The total volume of E- commerce transactions in India was about Rs 450 crore in the year 1999-2000. Out of this volume, about Rs 50 crore were contributed by retail internet or Business-to-Consumer transactions, and about Rs 400 crore was contributed by Business-to-Business transactions. To some, Rs 450 crore of E-commerce transactions seems negligible. But to many these transactions are impressive with the background of almost non-existing regulatory framework that support e-commerce in India. Thus, if the E-commerce based businesses can emerge as viable propositions working within the confines of existing not-so-conducive framework, imagine the potential that would be unleashed once we have suitable and catalyzing framework in place? With the passing of the IT Bill in both Houses of Parliament, a legal regulatory structure is now in place. What is now required to promote E-commerce is an effective enforcement mechanism (Nasscom, 1999).

The most talked about and now well endorsed feature of E-commerce is its global flavor. Evidently, the E-commerce has also started to show its true potential in India. While on one hand, India's E-commerce solutions are becoming a sought after commodity around the world, even the E-commerce based businesses are increasingly leaving their distinct marks of technology competitiveness, viable business model and rapidly growing entrepreneurship in India.

STUDY ON E-COMMERCE INDUSTRY IN INDIA

To understand the situation in India, Nasscom conducted a survey on India's potential for e Commerce industry with the following points of reference:

(a) Understand and evaluate the present state of E-commerce industry and market in India.

(b) Anticipate future potential of E-commerce industry and market in India.

(c) Identify present and potential global trends that are expected to define new paradigms of E-commerce scenario.

(d) Analyze current internet access and penetration in India and evaluate potential threats.

(e) Suggest suitable strategies to enable Indian IT companies to address and capture a significant share of E-commerce market.

(f) Increased proliferation of Internet.

(g) Achieving a leadership position in E-commerce technologies and infrastructure market.

(h) Developing state-of-the-art E-commerce enabling and access infrastructure in India.

Going by even the preliminary findings, it can be easily summarized that E-Business can indeed emerge as a major opportunity for India. This acquires twin connotations of E-commerce and E-Business transactions from local businesses and the huge opportunity for software exports to other countries by quickly joining the E-Business opportunities. This survey is the first of its kind which has taken into consideration India's twin assets - software industry and rapidly restructuring industry sector.

The scope of the study also included finding level of awareness among corporate executives about E-commerce and its benefits; perceived importance of E-commerce as being integral to their corporate strategy framework; prospective volume of transactions expected to be carried out through E-commerce; opportunity for exports of E-commerce solutions and services.

Penetration analysis of online services based on the NASSCOM (1999) study indicated that penetration rates of internet and E-commerce transactions in India are expected as follows: For Business-to-Business transactions, Indian industries are expected to reach online penetration of 2% by 2003 and 8% by 2008. This would be about one tenth of E-commerce penetration in Japanese industries during similar periods. It further expects that India's active internet population would spend close to 1.4% of its total regular household spending through internet purchases by 2003. Revenue streams would increasingly be aligned with emerging global model. Most of the revenue would come from commercial transactions and a small amount would come from advertisement revenues. It is expected that by 2003 Internet Business-to-Consumer transaction would constitute 80 percent of the revenue. The advertisement revenues would amount to about 5% of total advertisement money spent. It is predicted that 3-4 percent of E-commerce could be the result of a growing group of affluent Indians living overseas who are likely to make some form of purchase from Indian based Web sites either for their own personal consumption or as gifts for their kin in India.

Some of the preliminary findings on E-commerce and E-Business software exports potential are as follows: In the year 1999-2000, Internet and E-commerce related software and services exports from India brought US $ 340 million out of an estimated US $ 3.9 billion software and services exports. Supply Chain Management optimization is one of the strongest drivers of global E-commerce solutions market, as it spurs Business-to-Business transactions. More than 68% of Indian software houses have informed of strong expertise in Supply Chain and Distribution Management solutions. Almost 32% of IT company respondents have identified web based consumer businesses as a major opportunity area, with expected paybacks beginning in 3-4 years. Some of the promising areas of E-commerce services are: legacy application integration; Internet application integration; EDI, Migration to web based models; new IT frameworks, integration with business strategy and strategic IT consulting (OECD, 1999).

With corporate planning to revive IT spending after Y2K problem, E-commerce solutions have emerged as a major technological and business opportunity for Indian software houses. However, there is a concern over present state of affairs with regard to facilitating and supporting E-commerce in India because of the poor infrastructure. However, the software industry in India as well as user industries are putting together their resources for adopting E-Business strategies.

In spite of passing of the I.T. bill, the framework and infrastructure in India still is not conducive enough for proliferation of E-Business. More than 88% corporate executives expressed keen awareness of increasing adoption of E-commerce and its potential benefits. More than 41% of corporate executive said that E-commerce transactions are integral to their corporate plans. Among the executives responding, nearly 85% were industries which did not have direct or frequent contact with end-consumers, but they can see that in the future they may have to.

About 18% of corporations already have some form of E-commerce infrastructure in place. These have been facilitated through upgrade of existing IT systems or fresh installations configured for E-commerce transactions. The most commonly found business practice is to establish extranets or EDI (Business-to-Business) infrastructure for initial or learning period. This is subsequently upgraded to internet based access mechanisms for customers. More than 90% of the executives cited perceived efficiency in Supply Chain Management as motive for Business-to-Business E-commerce, and enhanced Customer Services (Customer Relationship Management) for Business-to-Consumer transactions. The other reported benefits included moving towards Justin-Time management. Almost 78% of respondents concurred that for them technology is not a major concern, nor is the required budgetary resources. However, the high cost of effecting such transactions and inadequate services with regards to telecommunication in India along with bandwidth were cited as major impediments. About 48% of respondents said that given the right framework and cost-effective infrastructure, they would like to move towards adopting E-commerce at the earliest. Some of the key industries that have high potential for early adoption of E-commerce are: Financial (Stock Exchanges and Banks), Automobiles, Retail, Travel, IT and Manufacturing. However,in India presently there are only two hubs of EDI based transactions which are in Pune and Gurgaon

E-BUSINESS INITIATIVES

There is a clear need of government action and international agreements on E-commerce issues. It is generally recognized that there is a need for simple, transparent and predictable legal environment for E-commerce on a national and international level and that Governments should avoid undue restrictions on E-commerce in order to avoid competitive distortion. To develop such global framework for E-commerce, a large number of international and regional bodies have been working notably amongst them being OECD, WTO, WIPO, NCITRAL and ITU. A comprehensive document reporting on international and regional Bodies and their activities and initiatives in E-commerce was prepared (Jan. 1999) by OECD Secretariat for OECD Ministerial Conference, which was held in Ottawa in 1998. "A Borderless World: Releasing the Potential of Global Electronic Commerce" (OECD, 1999) indicated the potential for global business for many countries. Second half of 1999 saw commitments of some of the big companies to move their multi-billion dollar purchasing operations on to the Internet. With many Fortune 500 Companies moving their supply-chain transactions involving purchase and sales of goods and services on to the Internet has created a real necessity among those who do not have E-commerce presence to move in quickly or be left behind. Now major multinationals such as Intel, IBM, Cisco, 3Com, Dell and many others have had E-commerce models for 3-5 years. E-commerce between business and consumers (B2C) which means direct purchase of products on the Internet, for example, books, automobiles, music, entertainment, software, PCs and many other products has also picked-up significantly. E-commerce is one area where market forecasts made in 1996-97 turned out to be much less than actual performance. Projections have been revised subsequently by most of the consultancy firms. Forrester (IEEE, 1999) forecasts that worldwide Internet Commerce will reach between $ 1.4 and $ 3.2 trillion in 2003, up from a range of $ 55 billion to $ 80 billion in 1998. This growth will happens as the world's largest economies of India and China would completely come online by 2004.

OPPORTUNITIES FOR INDIA

At macro level, if one looks at the opportunities for India, outsourcing software and IT services from USA and other advanced countries have emerged as one of the means to reduce the cost of E-commerce today. In this regard, India has emerged as a preferred destination. Therefore, Indian Software Export Industry could target for a significant share of global e-Business/E-commerce market in the years to come. In the emerging global digital economy, it would be necessary for Indian firms to follow the same online b2b practices as done by others in the world to be a stakeholder. E-commerce would give opportunity to small and medium Indian enterprises to project their capability globally and thus participate more proactively in such ventures. Many traditional sectors such as handicrafts, textiles, art, and herbal medicines which have failed in the past to tap the global markets due to lack of marketing resources, should find an ideal medium in internet. Indian cultural heritage, monuments, temples, and classical music could be made known widely to the world at a very low cost of marketing and could be further leveraged in enhancing global tourism of which India gets only 2 percent. E-Commerce is one IT tool that could do wonders to the Indian economy in many fields.

In NASSCOM study, India has the potential to create E-business worth $1.5 billion by 2004 and around $10 billion by 2008. E-commerce is a fast moving area internationally in terms of opportunities and the technologies. It is predominantly led by industry and user sector with government playing a catalytic role. Government by providing proactive policies and environment and facilitating support and critical inputs for growth can do wonders for E-commerce in and beyond India. In the last one year, significant progress has been made in the country in this regard. New Telecom Policy 1999, new ISP policy and certain specific policies have emerged out of acceptance of Part I of the Report of National Task Force on IT and Software Development. They need to be implemented aggressively and without delay. The drive to set-up world class information infrastructure at most competitive price has to be accelerated. The following noticeable progress have been made in India as of July 2001:

(i) Since announcement of Internet Policy in November 98, 315 licenses have been issued to ISPs by DoT. With the availability of a large number of ISPs, it is expected that market forces will govern the pricing and prices will come down further.

(ii) National Internet backbone is being established which would provide connectivity to Government as well as private ISPs. TRAI has fixed the upper limit for Internet tariff, ISPs are revising tariffs periodically at a very economic, competitive and attractive prices to mobilize the customers.

(iii) VSNL, STPI and others are providing international bandwidth from multiple locations. STPI with the single window facilities including high speed datacom services at 17 locations countrywide has multiple sites and are enabling more than 1200 companies to set up Internet operations.

(iv) NTP-99 has given significant importance to online E-commerce. It is expected that information for E-commerce and B-commerce will be passed seamlessly. The requirement to develop adequate bandwidth of the order of 10Gb on national routes and even terabits on certain congested important national routes will be immediately addressed to so that growth of IT as well as E-Commerce will not be hampered.

DEVELOPMENT OF SUITABLE LEGAL FRAMEWORK FOR E-COMMERCE

Information Technology Bill (Government of India, 1999) has been passed by both Houses of Parliament. The Bill provides legal recognition of electronic records and purposes including its authentication through digital signature. This Bill has enabled the conclusion of contracts and the creation of rights and obligations through the electronic media. It has proposed to provide a legal implementation structure. It has also proposed to amend Indian Penal code and Indian Evidence Act to provide for necessary changes in the various provisions which deals with offences relating to documents and paper based transactions; amendments to Section 2 of the Banker's Book Evidence Act and RBI Act, 1934 will include safeguards for E-commerce transactions. The IT Bill is also aimed at prevention of computer crimes.

As the Bill comes into effect, corporate and individuals will be able to rightfully carry on trade through electronic medium without the fear of losing rights and obligations. This will give E-commerce in India a much-needed boost. As the communication network expands and computerization gathers momentum, the scope of E-commerce will expand. The need for the banking and financial system to adjust to the changing circumstances has become urgent. In India, E-commerce in the financial sector is catching up. The pre-requisites for the E-commerce in the financial sector are: total branch computerization; inter branch connectivity; inter bank connectivity; safeguards to ensure accountability of the transactions put through computers and appropriate legal framework. In the advanced countries, owing to the existence of a well developed telecommunications infrastructure, the accessibility of the internet connection is expeditious, even when a large number of customers want to browse or access a particular site. But in India the lines get very often choked and it is not uncommon that one may be compelled to wait for a long time to get access to a particular website. So to get E-commerce to be widely accepted as a reliable means of conducting business a state-of-the-art communications network is needed. The INFINET commissioned by RBI recently is major step in reducing delays and increasing faster communications in the financial sector. The INFINET plays a key role in inter-city Electronic Clearing Service (ECS), Electronic Funds Transfer (EFT), Centralized Funds Management (CFMS), Centralized Funds Enquiry System (CFES) and the proposed Real time Gross Settlement (RTGS) system.

The practice of payment through Internet is expected to pick up in the near future. Besides Credit Card, Electronic Checks will be in use with multiple vendors and banks/financial institutions. With WTO Commitments to encourage E-commerce in the Third World countries, Indian Copyright Act, 1957 (amended in 1994) has been broadly in conformity.

Likewise certain amendments to Indian Patent Act in the form of the Patents Amendment Bill has also been introduced in the Parliament. For protection of intellectual property rights, a Bill has also been introduced in the Parliament. These are under the consideration of the Parliament. A knowledge base in IPR has been created and IPR Cell set up in MIT provides facilitating support. Worldwide new developments on IPR in the context of emerging digital economy are followed and proactive actions are taken. In line with WIPO Treaties (WCT, WPPT, Digital Agenda), a project is underway on Electronic Copyright Management System to develop Image Watermarking Technology. To accelerate E-commerce in Internet, it may be necessary to take followup action on WIPO Copyright Treaty, Technology Development and Pilot Projects on E-commerce.

PROMOTE E-COMMERCE ENTERPRISES

Promoting innovations, supporting entrepreneurs with brilliant & commercial ideas, providing business support, create incubation centers are some of the areas where government with the participation of industry and other sectors have been playing a catalytic and facilitating role. This may need to be further intensified. Some of the recent initiatives taken include:

(i) MIT in association with SIDBI, IDBI and software industry has set up a corpus of Rs 100 crore recently, named as National Venture Fund for Software and Information Technology Industry (NFSIT). NFSIT is targeted to provide venture capital to start up software professional and IT units in small scale sector.

(ii) To provide help to small enterprises, STPI has recently set up business support centre at San Jose, USA.

(iii) In various software technology parks as well as other parks promoted by State Government, Incubation Centers and plug and play facilities are being set up.

(iv) To release the Indian venture creation and incubation engines, procedures and policies are being simplified.

SECURITY FOR E-COMMERCE

Following phenomenal expansion of Internet and its application in E-Commerce, there is a tremendous rise in economic transactions using this medium. However, since Internet is evolving as a means to provide easy interconnectivity of networks for information exchange as freely as possible, the systems are not designed keeping the requirements of information security. Aspects like privacy, integrity, authenticity and non-repudiation which are essential elements for a commercial transaction, are not taken care of in its elemental form. There are frequent reports of hacking and other kinds of abuse of the network owing to such deficiencies. To make this medium suitable for E-commerce, significant work on a continuous basis needs to be taken up and government is expected to take keen interest in this area of work.

Encryption being the key element to ensure security in a network communication, the government could consider extending the present restriction of 40 bit encryption level. This will necessitate an upgradation of facilities with the national security agencies. Specific network security products like Intruder Detection System and Firewall are being developed in the country. Though, many such products are available internationally, national capability in this area is required to ensure that no trap-doors are available giving rise to the lack of confidence on the part of business houses. There would be, in addition, indigenous products similar to Secure Electronic Transaction (SET) and Secure Socket Layer (SSL). Besides expertise and capability building, efforts are needed to promote E-commerce as a wealth building enterprise which would increase GNP. The government is ensuring setting up of Public Key Infrastructure and Certification Authority (CA) by the end of the year 2001 following the passage of IT Bill so that interested E-commerce players can have secure transactions as required.

E-COMMERCE AND STANDARDS

With a view to ensure global seamless connectivity for E-commerce, as the demand picks up, the need for such standards have been felt more in 2001 than in any other year. The general perception is that it should be private sector, market led approach to open standards supported by Government. In this regard, Ziff Davis Global Information Infrastructure (GII) Group have been working for a standard for Internet based e-commerce involving a broad alliance of leading global corporations, institutions and individuals. NIST, USA is providing effective support for industry led standards (through alliance with Internet Engineering Task Force). These efforts include (i) building standards road-maps with private sector stakeholders; (ii) providing technical assistance to industry in the development and harmonization of open standards; (iii) establishing neutral test beds and developing reference implementations with technical experts from the private sector; (iv) developing test methods and infrastructures for measurement and demonstration and (v) contributing to implementation guidelines set by ITU, ISO, IEC, UN, CEFACT who have been working in this area.

It is necessary to set up a dedicated team in the country which would follow these international trends and actively participate in these international standards so that capabilities and interest of India are taken care of. If India is to become a major stake holder in E-commerce, Indian Industry needs full commitment from the government in this area. Real benefits of E-commerce will come to India if Indian industry leap-frogs in using these tools to re-engineer its operations aiming at gaining competitive advantage. USA and Europe through support of their respective governments have taken such initiatives. Specifically under the Fifth Framework Program of European Commission, one of the key actions is related to New Methods of Work and Electronic Commerce. In USA, industry, government and Small Business Electronic Commerce Working Group has been created to serve SMEs. Collaborative programs are being developed to help SMEs benefit from electronic commerce through increased training and education. To take lead in E-commerce, it is necessary to develop such programs. Various organizations of MIT could work with different leading industry associations to develop such awareness building and education programs. A special group could be set-up to develop this. A proactive role by WTO, WIPO and other multilateral organizations would put pressure on all countries to quickly gear-up for E-commerce culture. However, a major concern is the proposed zero-duty issue on E-commerce, if it is considered under GATT. Developing countries need to examine the consequences carefully and evaluate possible option of its classification under GATT. For certain international E-commerce, one needs to know if E-commerce transactions should be classified as cross-border trade or consumption abroad. Likewise, a considered view on domestic taxation issues needs to be taken.

[Reference]

REFERENCES

Department of Electronics 1999, Information Technology Bill along with Cyber Laws, Government of India, Published in Electronic Information & Planning, New Delhi.

Digital Economy 1999, U.S. Department of Commerce, Reports prepared by the Washington, D.C.

GICC Report on Internet and E-commerce 2000, Government of India, New Delhi.

IEEE 1999, 'E-commerce Perspective from Different Parts of the World', published in Information Technology, Special Issue, November, New Delhi.

Information & Technology (IT) 1997, India's Advantage in Information Technology, Vol. 1, Issue 3, pp. 117-124, December, New Delhi.

IPAG 1999, 'Electronic Commerce Technologies and Applications', IPAG Journal, Nov-Dec, pp. 213-221, New Delhi, India.

Nasscom McKinsey 1999, 'Indian Information Technology Strategy', Special Issue, commissioned by Government of India, New Delhi.

OECD 1998, A Borderless World: Realizing the Potential of Global Electronic Commerce, OECD, Ottawa.

U.S. Government, Toward Digital Quality: Working Group on Electronic Commerce, Second Annual Report 1999, Washington, DC.

WTO 1999, E-commerce, WTO and Developing Countries, Edited by Arvind Panagariya, New York.

WTO, Work Program on Electronic Commerce' 1999, Proceedings of the Ministrial Conference held in New York, NY, 1999.

[Author Affiliation]

S.K.Kuthiala, Ph.D., University of North Florida, Jacksonville, FL 32257, USA

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