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The vast and rapidly growing market of India is opening up for electronic commerce and presents ample opportunities for SMEs in Hong Kong and in the region.

As part of its T-box transformation programme, which helps SMEs improve their branding, e-commerce, manufacturing and supply chain solutions, the Hong Kong Trade Development Council (HKTDC) has arranged a webinar entitled “T-box Workshop on India’s Booming Retail and E-tail Sectors – Developments and Opportunities”.

Launching the webinar, Rajesh Bhagat, South Asia consultant at the HKTDC, said India is one of the world’s fastest-growing economies and explained that e-commerce in particular presents attractive opportunities.

The country’s gross domestic product (GDP) is set to be the world’s sixth-largest by 2025 at US$5 trillion. Rising incomes, an expanding middle class and a diverse population with a diminishing rural-urban gap were all positive indicators for retail sales, Bhagat said.

He explained that consumption is growing strongly in the country, and “India is the fifth largest retail market in world by value. Retail, e-commerce and e-tail have good prospects. There were 2,250 technology start-ups in 2021. [India] is the third-largest unicorn hub, after the United States and Mainland China.”

Giving an overview of the retail market worldwide, Dr Hitesh Bhatt, marketing director, Retailers Association of India, told the webinar that the retail market in India in 2019 was estimated at US$854 billion against US$5.47 trillion in the US and US$624 billion in Germany. The Indian retail market is projected to be worth US$1.1 trillion to US$1.3 trillion in 2025, with America’s expected to be US$5.9 to US$6 trillion and Germany US$750 billion to US$800 billion.

Cross-border business expands

Sthiradhi Das, business manager (Sourcing and Vendor Development), at Croma, Infiniti Retail Ltd said that cross border e-commerce (CBE) opportunities in India was worth US$562.1 billion worldwide in 2018 and estimated to rise to US$4 trillion by 2027, accounting for 22 percent of the global e-commerce market. Speed and efficiency and a global desire to explore drove CBE, he explained.

CBE is currently strongest in the United Kingdom, US, Korea, Mainland China and India, Das said.

The Indian e-commerce market is expected to reach US$111.4 billion by 2025 and US$350 billion by 2030. A government programme to boost rural broadband will further drive e-commerce expansion, he said, with smartphones becoming usable in all villages.

Das added that order volume increased almost 36 percent as demand grew during the Covid-19 pandemic.

The pandemic drove expansion in several online retail categories. Beauty and wellness expanded 295 percent in 2020-21. Sales of work-from-home accessories such as chairs and portable desks also grew strongly. Demand for home entertainment and kitchen appliances drove 162 percent growth in electronics in 2020-21. Pet supplies, gardening products and home hygiene products also grew 20 percent.

Das said all sellers in India needed a Goods and Services Tax (GST) registration. Foreign firms must establish an Indian firm with GST registration or partner with an Indian distributor or importer. Finding third-party service providers can help to accelerate access.

Sales were strongest on major event days, including Diwali (October-November); Dussehra (October), Independence Day (August), Christmas and Republic Day, he added.

Incomes rise rapidly

India’s per capita GDP expanded at a compound annual growth rate (CAGR) of 10 percent between 2013 and 2018 against 1.8 percent in the US and 1.5 percent in Germany. The country had 560 million internet subscribers versus 283 million in America and 74 million in Germany.

In 2019, retail accounted for 10 percent of India’s GDP and there were already 1.17 billion mobile phone subscriptions. Online sales accounted for 3.4 percent of all retail in the country. Food and groceries made up 64 percent of retail sales, with apparel accounting for 10 percent, consumer durables and IT at 9 percent and jewellery 7 percent.

“E-commerce is expanding at a 30 percent CAGR, reaching US$30 billion in 2020 with between 100 million and 110 million shoppers, and projected to expand to US$100 billion to US$129 billion on 300 million to 350 million consumers by 2025,” Dr Bhatt said.

Online penetration of the retail market in 2019 was 3.4 percent but e-commerce is expanding at a CAGR of 36 percent. By comparison, in another leading Asian market, Thailand, penetration was 2.0 percent and the CAGR 12 percent. In Mainland China, the penetration rate was 26.2 percent with a 14 percent CAGR.

“India will generate many opportunities over the next three to five years,” Dr Bhatt said.


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