An open letter to the Finance Minister from an Indian e-tailer

Dear Finance Minister,

As a voice of the eCommerce ecosystem in India, I can only imagine the Herculean juggling act that the budget presents before you.

We understand that your budget will table proposals in line with the path the government visualises for industry as a whole. We know that the Government is focusing on promoting eCommerce, innovation and entrepreneurship.

We are also aware that 2014 has been a defining year for eCommerce in India. Your Government, therefore has had the chance to see and appreciate its potential.

Six big areas that this budget could help the industry with are:

Building an aggressive roadmap for the National Digital Literacy Mission: eCommerce will be one of the many beneficiaries of the Digital Literacy Mission. Yet, genuine progress of any kind will be elusive if public-private partnerships do not move in this direction. 6.5 lakh villages adding up to over 147 million people, need to benefit serially from the National Digital Literacy Mission (NDLM). Whether this digital literacy is used to enable education, healthcare, citizen services, financial services, or any other basic need, technology and connectivity can make a huge difference to the socio-economic levels of a community. The budget can set forth the agenda to extend telecom infrastructure through initiatives like the National Optical Fibre Network (NOFN) and encourage the industry to be ready with solutions that can be rolled out using the NOFN. There can also be constructive frameworks to ensure scale and awareness to build acceptance, so that communities co-opt as stakeholders. Teachers, community leaders and grassroots organisations will serve as the bridge that reach out to those digitally excluded.

FDI: A large number of eCommerce firms are expecting that the new government will show the path for foreign direct investment (FDI) in retail in India. This will pave the way for global retailers to offer their formidable knowledge, and supply chain in India; moreover, I believe smaller eTailers would see strategic investments by international brands looking to enter and expand in India. Allowing FDI would bring funds to more players thus more spending on educating and acquiring customers to come online; which would potentially boost the consumption and benefit small traders and manufacturers over the long haul. Most eCommerce companies would welcome clarity as a strategic input to their business.

Tax Clarifications: eCommerce companies struggle with issues such as double taxation, multiple interpretations of taxes related to eCommerce. The industry is looking forward to implementation of GST. Furthermore, to boost the growth of eCommerce in India the industry believes the government should provide exemption from VAT and sales tax for online retailers. Clarification on Service Tax between domestic and overseas vendors for eCommerce and export proceed realisation (SEZ) is needed from the budget.

Tax Incentives: eCommerce firms are also expecting implementation of crucial tax incentives in order to boost investments in logistics infrastructure and technologies. The integration of India Post into the logistics infrastructure, with industry, would help boost the growth of the industry as products can be delivered faster and at a more efficient cost.

Data Centres and Cloud Services: Companies are also expecting tax incentives for building data centers and cloud services within the country. These technology infrastructures will not only provide better data security but should also reduce costs. If built properly, the infrastructure should also reduce speed latency associated with international data centers.

Integrated Solutions: From making commodity boards profitable, to access-to-market for handicrafts, to better packaging solutions for made-in-India produce, I see a lot of collaboration happening to make ecommerce a success in India. Facilitation of these objectives, via special purpose vehicles may expedite the optimisation and coordination between Ministries and Boards.

Over to you, Honourable Finance Minister.

Humbly yours,
Ashish Jhalani
eTailing India

About the author: This article has been written by Ashish Jhalani, CEO of eTailing India