Politic-Economic-Society-Tech

E-commerce in India to touch $41 b by 2005 

E-commerce in India is projected to grow 10 times in value over the next five years, according to a joint study undertaken by the country's main software industry body and the Boston Consulting Group.

E-commerce is expected surge to Rs 1.95 trillion by 2005 from an estimated Rs 190-Rs 200 billion in 2000, according to the study released by the National Association of Software and Service Companies (NASSCOM) and the Boston Consulting Group at a news conference in Bangalore on Thursday.

The auto and consumer good sectors are expected to lead this rapid growth in a country with a population of one billion people.

"The full benefits of e-commerce cannot be realised in isolation of the overall business goals and the absence of an offline presence," said Phiroz Vandrevala, chairman of NASSCOM. "There is a growing realisation that pure-play dotcoms in many industries are unlikely to be successful," he added.

B2B commerce will account for almost all of India's e-commerce business by 2005, as firms make increasing use of online procurement, which promises to reduce costs.

"Though e-commerce valuations have crashed, e-commerce spending has not," the report said, adding "many established companies, in India and abroad, are spending money on becoming 'e-enabled'."

The report is based on research conducted by NASSCOM and the Boston Consulting Group between January and May 2001.

The expected growth in India's e-commerce business comes in the backdrop of rising sales of personal computers in the country due to falling prices and soaring Internet penetration.

The PC market grew by more than 30 per cent in the year to March 2001, with nearly two million units sold. Internet subscribers are expected to grow to 15 million in two years from less three million now.

NASSCOM remains optimistic about the software industry's growth although the high-profile sector is currently struggling with a slowdown in orders from the US, its main export market.

Vandrevala said that the sector's exports were seen rising 40-45 per cent in the year to March 2002. "We are still very confident that the industry's exports will grow to $8.5-$9.0 billion this year," he said.

India's leading software exporters are trying to cut dependence on the US, which accounted for 62 per cent of their combined business in the past year, while Europe contributed 24 per cent.

source: THE TIMES OF INDIA NEWS, Aug 3, 2001