-Commerce in India has been one of the bright spots in Indian economy compares to the gloom in most other sectors in India. Almost entirely led by first generation entrepreneurs e-commerce has the potential to transform manufacturing, logistics, warehousing, retailing in the same way IT and ITeS companies changed the information technology services industry globally. Like IT and ITeS, e-commerce industry can create millions of jobs in India and establish India as the place to set up manufacturing. All governments since 1999 have been actively promoting IT and ITeS industry because of its potential to create jobs.

1. e-Commerce & Make in India
2015
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There can be no Make in India without e-Commerce
e-Commerce in India has been one of the bright spots in Indian economy compares to
the gloom in most other sectors in India. Almost entirely led by first generation
entrepreneurs e-commerce has the potential to transform manufacturing, logistics,
warehousing,retailing in the same way ITand ITeS companies changed the information
technology services industry globally. Like IT and ITeS, e-commerce industry can
create millions of jobs in India and establish India as the place to set up manufacturing.
All governments since 1999 have beenactively promotingIT andITeS industry because
of its potential to create jobs.
Unfortunately, unlike IT and ITeS industry, e-commerce has been actively discouraged
by successive governments by creating an uneven playing field for the various e-
commerce players. By creating an artificial differentiation between marketplace and
inventory model, government is stifling the growth of e-commerce, stifling the
entrepreneurship potential of ordinary middle class Indians and in effect promoting
entrenched large organizations and traders.
Indian non-grocery retailis dominated by multinationalbrands and products developed
and manufacturedoutside ofIndia. In effect Indian retailhas become a front-endshop
for large-scale multinational manufacturers. For years together Indian retail has been
dominated by traders big and small and who have not invested in skill development,
productivity enhancement, product development or manufacturing in India. This has
been perpetuated because retailing in India has not pushed Indian manufacturing,
brands and product development.
Indian retail is not geared to promote local manufacturing:
Successive governments have talked about manufacturing in India,howeveralmost all
of them formulated policies that promote tradingovermanufacturing. Today it is easy
for someone with a few lakh rupees to travelto China and source the product,and then
sell it in India at a profit. Indian physical retail is full of products that have been
manufactured in China,sourced at a low price and sold in India at double or triple the
price – especially in the unorganized sector. In fact, the smallest Chinese brands are
now household names in India. There is no incentive for a local manufacturerto build
a brand, manufacture and sell in India.
The expertise and investment required forlocalmanufacturing to build brands and start
manufacturing in India has been non-existent, because of the lack of capital and

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access to broadermarkets. The organized and unorganized retailers only sell products
of existing Indians players and foreign brands and charge huge commissions for
pushing their products, effectively edging out local brands and manufacturers.
To spur local manufacturing.it is important that governmenteitherprovides access to
capital through Indian financial institutions (which are stretched) and technical
expertise or align policies in a way for foreign investments to come into India for
improving local expertise in designing and manufacturing products. E-commerce can
be one of the easiest ways in which government can bring in investments in creating
local brands with local manufacturing. E-Commerce is not an Indian phenomenon
only, it is a global business for global market. Alibaba’s contribution to China’s
manufacturing and brands cannot be ignored - Alibaba made it easy for buyers from all
across the world to buy from China. Make in India will be incomplete without Buy
from India,and e-commerce is the preferred way for any business or consumerto buy
globally. Today there are customers globally who buy directly from China’s e-
commerce players by cutting out marketplaces in theirown country. By using expertise
in advertising, brand building and logistics and warehousing, e-commerce companies
can assist our local manufacturers in selling to customers globally, thereby making it
easy for Indian manufacturers to access globalmarkets. To spurMake in India it would
be prudent to allow Indian e-commerce companiesto targetglobalcustomers using any
model possible.
The numbers look promising: But does Policy?
E-Commerce with its choice, variety and convenience has expanded consumption in
the country (i.e. a market for some products and goods would not have existed if not
for e-commerce). It is estimated that this market expansion contributed in parts by e-
commerce would account for at least 10% of the projected overall retail market of $1
trillion by the year 2020. Conducive policies and local manufacturing promotions by
government can help in getting 50% of these goods being manufactured in India,
leading to expansion of jobs in the country.
With the advent ofe-commerce we have seenmany productsgetting online and finding
a market. The total retail market in India is estimated to grow to $1 trillion by 2020.
Out of this the Ecommerce market is estimated to account foraround $50billion. This
market cannot have a stand-along growth without a supply of locally manufactured
goods. There is a likelihood of $25billion of goods to be manufactured and supplied in
India through Ecommerce.

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The internet is a market of one, and the barrier for entry for small entrepreneurs,
craftspeople and brands to be able to sell directly is significantly low. To build on the
success that has been achieved,businesses need more capitalto scale. The carpenters,
painters, weavers, and othercrafts people who have created small markets and brands
for themselves, need to produce more to find more sales and growth. For them to do
so, their risks need to be minimized,which can happen only if e-commerce companies
can underwrite their risks, by the way of underwriting the inventory. By underwriting
inventory of the small manufacturers and businesses, e-commerce companies allows
them to focus on theirmanufacturing and innovation ratherthan worry about sales and
marketing.
E-Commerce is probably one of the only segment ofbusiness and economy which has
seen explosive growth in recent times. With growth ranging from 60%-80% CAGR,
this growth has been achieved by investing in areas which were hitherto
underdeveloped or neglected by the traditional retail industry operators – traders,
retailers and shop owners. Single handedly, e-commerce companies have created a
logistics and warehousing network that employs now more than 100,000 people and is
poised to grow to 500,000 by the year2020 in metros alone. Cumulatively,e-commerce
industry is expected tocreate about700,000 jobs directly and manymore indirectly.For
this job creation to continue and industry’s continued growth, it is imperative the
funding restrictions are removed and the companies and customers allowed to choose
their own model.
In the future E-Commerce operators are expected to invest in:
 Data Centers
 Logistics Infrastructure
 Employees
 Sourcing of products
 Digital marketing & other advertising
 Office space
 Inventory,
These are expected to create jobs all across and overall add to the size of Indian
economy. For example, data centers for global customers, being created in India has
been solely because of the investments being made in India on the potential of the
Indian e-commerce companies.

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By opening up the inventory led model, India can create more success stories in the
area of e-commerce, which can help it broad base wealth creation in India. Some of
the most popular internet companies of China, like Baidu, Alibaba, Tencent, JD.com
have listed and are cumulatively worth more than $500 billion, creating hundreds of
multi-millionaires and bringing in more than $30bn in cash from IPO proceeds. By
comparison Indian stock market’s totalmarket cap is $1,500 billion. To create wealth
and broad base wealth in India, we cannot keep on implementing policies which end
up benefiting only a few. India needs to open up its internet based business models to
various funding options and business models so as to create more entrepreneurs and
more wealth.