Enabling E-Commerce in India by tls14265


									                    ENABLING E-COMMERCE IN INDIA

                                   Amarjit Singh
           Department of Computer Science, HP University Shimla, India
   Department of Computer Science,HNB Garhwal University, Srinagar(Garhwal),
                                Uttaranchal, India
   Department of Computer Science,HNB Garhwal University, Srinagar(Garhwal),
                                Uttaranchal, India
 Department of Computer Science, Amravati university, Amravati (Maharashtra), India

Because of e-commerce, the world stands at the threshold of a new revolution. Currently,
regulatory structures in many countries limit market access by infrastructure providers.
But with the transformations coming around frequently, with the liberalization of the
telecommunication sector world wide, the use of electronic commerce will increase
rapidly. Electronic Commerce provides new opportunities for all overseas firms to access
India’s domestic market and vice versa. In fact, it has set the ball rolling in India. Every
service and information about the product is available just on a mouse click on
computers.The modern technology offers an opportunity to enterprises to upgrade
themselves and enter the global market at the right time and at a low cost. This would
work like a wonder drug for our entrepreneurs. In India, E-commerce is just a beginning
but its advantages are going to be realized soon. Whether the net impact of these
developments will bring the desired result will depend on the capacity of the whole
nation to prepare a domestic environment which encourages full participation in the
global information economy, the effectiveness in contributing to an international
environment which makes necessary the use of Internet as a tool to enhance
communications, conduct commerce, and increase the value offered to the customer and
the eagerness, the willingness, and also the capacity of the whole nation to act and
respond quickly and purposefully in developing policy approaches on electronic
commerce. There is no denying the fact that by facilitating the integration of Indian
economy and society with rest of the world, electronic commerce will encourage a
broader and a global outlook. The e-commerce will help to bridge the inter-regional
disparities. Since India has considerable competence in the area of software, it should
develop the congenial environment and enact appropriate rules and regulations to
integrate with the global market. As e-commerce offers new opportunities, Indian
entrepreneurs should try to reap maximum advantage. By knowing global markets, they
can reach and create a niche in those markets. Thus, it is high time that India should act
fast and decisively in order to use the growing electronic trade to our advantage.

Key words: E-commerce, Internet, Entrepreneurs, Electronic Trade, Global Information


Science & Technology has always influenced modes, practices and procedures of
business and trade. Of late, a never before phenomenon has been witnessed in the arena
of Science & Technology more particularly in electronics and internet. The fast changing
information technology and convergence of various communication technologies has
virtually taken the business practices by storm. E-commerce is becoming the key to
success. The use of internet has made the world small and through it business
transactions are conducted globally at a faster pace. The age of connectivity has reduced
distances and brought people closer. This can be directly attributed to the development of
electronics and communication technology. Some economists’ say that the newly
emerged economy be can very appropriately be called as the "transparent economy"
because the Internet makes has made it more open and exposed. The implication of e-
commerce encompasses various important issues like economic, legislative, technological
and social. As under WTO obligations, member countries are providing tariff-free access
to their markets resulting in greater competition. Transactions through e-commerce take
less time and are economically viable too. This would help increase the growth and for
this a strong and a stable legal system is required. It is a fact that in liberal and open
markets, e-commerce would dominate The other important essential features of electronic
commerce are privacy and security. There should be suitable guidelines to establish them
to ensure confidence among the players who transact through e-commerce. Today all
countries are working to achieve structural reforms in society under the key paradigms of
liberalization and globalization. The nation’s competitive power will determine the trade
and the nation’s strength in science and technology will play an important role to
dominate the trade. All organizations are making the best use of digitalization and use of
the Internet to achieve the desired goal. Computers and the Internet are now increasingly
widely used to function as part of the business. Transactions conducted through the
Internet will have enormous implications on the international competitiveness of every
nation, giving rise to new and exciting opportunities in both the domestic and
international arena to industries and also the governments to be a part of the global
economic system. Electronic commerce is burgeoning as a means to doing business at a
very rapid rate and is also showing every sign of continuing to expand. The rise of this
new medium is attracting increasing attention by both private and public sector in order
to remain upgraded and competitive so as to give 100 per cent services to their customers
efficiently and effectively. No single force embodies over electronic transformation more
than the Internet. The Internet has emerged as vital link for connecting almost every point
on the plant. Students, doctors, engineers and various other professionals get to access
vast information through the World Wide Web (WWW) network system. It will
revolutionize retail and direct marketing systems and facilitate international business
transactions because it reduces the economic distance between producers and consumers.
The E-commerce also involves using all round electronic methods and procedures to

conduct business activities to achieve the organizational goal. It uses different
technologies and embraces a wide range of financial forms such as electronic banking,
electronic trading, electronic cataloguing, Video conferencing, and multi-media
communications, electronic data interchange (EDI), electronic mail (E-mail), facsimile
(fax) and all forms of messaging between enterprises. It combines technologies (Internet,
EDI, electronic forms, electronic cash, Barcodes), information technology standards
(such as EDIACT, EAN/UPC), strategies (Just-in-time inventory management, efficient
consumer response).India is on the threshold of emerging as a key player in global
electronic commerce especially in terms of third largest reservoir of technical human
resource. It is not that Internet is new to India but in fact it has existed here for the last 10
years in the form of ERNET. Internet-users have grown phenomenally in the past 3 years
and there number is expected to touch the figure of more than 5 lakh by the end of this
year. The IT sector is growing at an annual rate of 30 per cent across the board. Between
1985 and 1995, growth rate of IT sector was almost 5 times faster than the world GDP
growth. India has a large and well-diversified base of small and medium Enterprises. The
global electronic-commerce provides our SMEs an opportunity to approach potential
customers worldwide through a low cost alternative.

Analysing E-Commerce For Development

What are some of the key questions that remain to be answered about e-commerce for
development? They include the following:

       What is the likely impact of e-commerce on developing countries?
       What are the main beneficial opportunities for application of e-commerce for
        developing countries?
       Which enterprises and which sectors will be best placed to take advantage of e-
       What package of policy and enterprise pre-conditions must be in place for this
        beneficial application of e-commerce?
       How can this 'e-commerce package' best be put in place in developing countries?
       What are the main threats and negative effects relating to application of e-
        commerce in developing countries?
       How can these best be addressed or mitigated?

From these questions, two analysis strands can be drawn out.

i. Impact Strand: Impact Analysis of eCommerce

As noted, e-commerce is generally presented in very positive terms but, along with the
potential benefits, come potential problems for developing countries. Understanding the
impact of e-commerce means viewing impacts from two perspectives:

       Top-down from an economic analysis of global trade and the alterations to models
        of global trade that e-commerce is likely to bring through reductions in
        transaction and other costs.

      Bottom-up from the experiences of individual enterprises using SWOT analysis of
       e-commerce in relation to Southern enterprises, and business analysis of those
       enterprises pointing to relevant business models, strategies and trajectories

ii. Capacity Strand: Support for eCommerce in Enterprises

If e-commerce is to be taken up by enterprises in developing countries, it will require a
number of underlying capacities to be present. An understanding of these capacities is
therefore required. It may be that enterprises themselves and the market can supply some
of these capacities. In other cases, though, there may be a case for promotional
interventions at a national or support agency level. Likely areas for support include: skills
development, facilitation of market access, infrastructure deployment (e.g. telecentres),
and promotion of e-procurement within the local NGO, government and business
community. It is important to recognise the 'stepping stones' to e-commerce that capacity-
building must support. From this, one can see that, behind the limited picture of full e-
commerce activity, there is a much broader picture of precursor e-commerce activity, as
shown in Figure .

               Figure : Stepping Stones to eCommerce in Development

                      A SURVEY OF E-COMMERCE IN INDIA

A survey of e-commerce was done by Indian Market Research Bureau under the direction
of Confederation of Indian Industry. The study followed two research approaches: Case
study based (in-depth discussions with the CEO and/or CIO of 9-10 pioneering Indian
organizations in the core sector, automobiles, consumer products, banking & finance,
trading and Internet retailing.) and Survey based (Business and Households) . In the
Survey involving business, two key respondents were identified as relevant opinion
makers in an organization: CEO and CIO. A self-filling structured questionnaire was sent
to 400 CEOs from key vertical segments in top 6 cities of India. Of this only 36 replied.A

comprehensive semi-structured questionnaire was conducted on 318 CIOs from key
vertical segments in top 6 cities of India. The organizations identified represent the top
4000-5000 organizations in India. The household survey was conducted amongst SEC A
&B households in top 16 cities.

Survey Results

E-commerce is associated more with accessing new markets

Businesses associate E-commerce more with accessing new markets, particularly
international markets. It is closely associated with the Internet, new selling environment
and a new method to acquire customers. More than 80% of the CIOs are of this opinion.

E-commerce is crucial element in strategy

40% of the CIOs say E-commerce is a crucial or substantial part of their business
strategy, while 58% of CEOs rated E-commerce as a crucial part of their organization

Improved customer service is the reason to adopt E-commerce

Not shortened supply chain, but improved customer service, increased
productivity/efficiency, access to international markets and cost reduction were the
reasons stated by over half of the organizations to adopt E-commerce.

Sales/Marketing is the focus area amongst business functions

Over 50% of the CIOs and over 55% of CEOs say sales/marketing, operations, corporate
and finance are the business functions likely to get impacted due to E-commerce. Across
various industry segments like general manufacturing, consumer products, media and IT
companies, sales/marketing is the focused business function.

E-commerce is happening

About 15% of the organizations contacted in the CIOs survey and 34% of the
organizations contacted in the CEO survey claim to be using E-commerce. According to
CIOs, accounting and customer support/after sales are the key areas where E-commerce
is being used. 51% of the organizations effect about 1000 to 99,999 E-commerce
transactions in a year. 22% say the rupee value of E-commerce transaction is over

Not many are prepared

Only 20% of the organizations covered under CIO segment are saying they are trying to
use E-commerce at least to some extent. 80% of the industry is in the process of gearing
up for the show. Banks want to wait and watch while sectors like IT and

Courier/travel/transport are the forerunners. Currently, E-mail and Internet are the
technologies used. Intranet, Extranet, EDI would be seen within two years time and
ATM, EFT, Digital checks, Smart cards by next 5 years.

Industry feels the medium is promising

Industry is optimistic about E-commerce and sees a potential of around 10- 12% of their
yearly turnover coming from E-commerce by the next two years and over 17% by the
next five years. But the service industry, which is running high on this note, can change
the dynamics for better.

Those using IT extensively will take up E-commerce

Over 82% of MNCs believe themselves to be good/excellent users of IT as against (66%)
of Indian private companies. Banking (67%) and IT companies (97%) believe themselves
to be good/excellent users.Faster execution (78%) and Better customer service (71%) are
the two most perceived benefits of IT usage. Finance, Corporate and Operations are
amongst the heavy users of IT. Sales/marketing, servicing and distribution are amongst
the medium users, whereas HRD/Administration. R&D and Production are amongst the
light users. Over 50% of those either using or likely to use E-commerce are also amongst
those who maintain IT spends have either paid much more than or are adequate to the
investment made.

ERP, EDI and Internet

21 % of the organizations surveyed have already implemented the technology and
another 31% are planning to implement it in the next 1-2 years. They are mainly
manufacturing companies. 23% of the organizations contacted have or are planing to
deploy EDI. They are mainly Banks, IT, Courier, Travel and Shipping companies.Internet
is currently used for communication purpose only. Email messaging (78%), FTP (44%),
Web site monitoring (48%). Amongst those having a web site, 84% use it for advertising
while 38% say they are selling products and services through web site. Over 55% do not
have a security feature or fire walls on their web site.

Lack of skill training impedes implementation of IT

Lack of skill/training within company (28%) and lack of funds (24%) are the factors
impeding the implementation of IT in companies. Most of them are from traditional
businesses like manufacturing, travel, transport, education etc. Banks complain about the
lack of vision of the top management.

It's not the business/trading partners

Lack of proper commercial and legal system for conducting business electronically
(26%) is the main barrier for the adoption of E-commerce. Security, lack of proper and
secure payment structure, legal issues: clear fix on contracts, liabilities in the digital
economy and trust and assurance are the main concerns.

Government should promote E-commerce

Spreading awareness and benefits of E-commerce and its benefits, enacting cyber laws,
developing a strong communication infrastructure are the key domestic roles for the

Internet is fine but what does E-Commerce mean for households?

A small proportion of PC Owners (26%) and Non owners (15%) are aware of E-
commerce. Perception about Internet is rich with it being identified as a source of
information, communication, learning and entertainment but relatively few amongst both
the segments feel that it is a source of purchasing products and services.

Households are shaky about buying over the net

A very high proportion amongst PC Owners (62%) and PC Non-owners (75%) said they
would not like to buy through the net. The reasons are they are not sure of quality and
delivery of products. They need to feel the products and bargain to buy them. Many do
not understand this new method of buying and selling in a digital environment.

Computers are not bought for browsing Internet

Browsing the Internet and purchasing products through Internet are amongst the least
important perceived benefits of owning a computer. Business, learning (self) & education
for children were the main reasons to purchase a computer.

Speculative estimate of E-commerce market

Based on simplistic assumptions about the contribution of 5-10% companies turnover in
2 years as the B2B E-commerce market and contribution of Rs.500-1000/month for half
or all the SEC A/B households, the E-commerce market size is as follows:

                              B2B                           B2C
High Estimate                 Rs.500 billion                Rs.168 billion
Low Estimate                  Rs.250 billion                Rs.42 billion

Four areas of focus to nurture E-commerce in India

      Positive business environment for deployment of new telecom technologies
      Technology/solution providers, industry bodies and government should educate
       Indian businesses more on potential benefits from E-commerce

      Businesses who plan to cater to Retail consumers will have to create awareness
       and provide reassurances before wooing the consumer to buy

      Government should play the most active role by enacting cyberlaws, making
       positive interventions when needed and ensuring adequate infrastructure

                             E-COMMERCE IN INDIA

The most talked about and well-endorsed feature of e-commerce is its global flavour.
Evidently, 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 e-commerce based businesses are leaving their distinct marks of technology
competitiveness, viable business model and entrepreneurship-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 a huge opportunity for software exports
to other countries by quickly joining the e-business bandwagon. India’s twin assets (the
software industry and rapidly restructuring industry sector) sector has been taken into
• As of September 2002, there was a PC base of 7.5 million PCs.
• More than 80 per cent of stand alone PCs sold during last two years were driven by the
need to access the Internet.
• Ninety one per cent of India’s corporate web sites are located overseas.
• Internet access continues to be most widespread amongst the 18-24 year age group.
However, all age groups have seen vast increases in access over the last 18 months. A
significant development is that almost 11 per cent of people over the age of 40 now
access the Internet.
• Males continue to outnumber females in accessing the Internet at 77 per cent compared
to 23 per cent. This has however increased from the ratio of 82:18 in June 1999.
• The Internet and e-commerce industry employs approximately 82,000 people. These
include web developers, web designers, system analysts, ISP infrastructure providers,
marketing staff, e-software professionals, etc. It is projected that by March 2006, the
Internet and e-commerce industry would employ over 400,000 people.
• India has about 1.6 million households connected to the Internet.
• Internet users on an average are estimated to be accessing the Internet for 6 hours a
The profile of Internet users in India is dominated by:
• The professional/corporate segment, which accounts for around 43 per cent of Internet
• Inching close behind is the student community represented by school and college goers.
This segment contributes close to 38 per cent of Internet surfers.

• Over half (59.2 per cent) use the Internet as an information resource, 11.3 per cent use it
as an educational tool and just under 8.2 per cent use it for entertainment.
• When asked what are the most frequently used services online, 73.4 per cent answered
e-mail, 77 per cent answered search engines and 23 per cent said they use it for
downloading/ uploading software.
• Of the total Internet users, around 20 per cent own credit cards and around 14 per cent
own mobile phones. According to the NASSCOM survey, considering the interest the
Government is taking in the growth of the market, e-commerce in India will witness a
significant jump over the next three years.
• Based on these preliminary findings, experts have concluded that penetration of Internet
and e-commerce transactions in India will increase by leaps and bounds. It is being stated
that in the case of business-to-business transactions, the Indian industry will reach online
penetration of 5 per cent by 2003.
• Revenue streams would increasingly be aligned with the emerging global model, it is
being anticipated. This would mean that the majority of the revenues would come from
transactions, while a smaller amount would be realized from advertising revenues would
come from transactions, while a smaller amount would be realized from advertising
revenues. It is expected that by 2003, more than 75 per cent of revenues of Internet
business-to-consumer business would come from transactions. The advertisement
revenues would amount to about 8 per cent of total add spend by the companies.
• Analysts also believe that one of every four non-resident Indians (NRIs) would make some
form of purchase from India-based web sites by 2003.
IT Companies: Some of the preliminary findings on e-commerce/e-business software
exportspotential are as follows:
• In the year 1999-2000, Internet and e-commerce related software and services export
from India brought in US$ 500 million out of an estimated US$ 4 billion software and
• Supply Chain Management optimization is one of the strongest drivers of the global e-
commerce solutions market, as it spurs business-to-business transactions. More than 68
per cent of Indian software houses have informed of strong expertise in supply chain
and distribution management solutions.
• Almost 32 per cent of IT company respondents have identified web based consumer
business as a major opportunity area, with expected paybacks beginning in three to four
• Some of the emerging hot areas of e-commerce services are: legacy application
integration; Internet application integration; Customer Relationship Management (CRM),
Customer Service Management (CSM), Enterprise Resource Planning (ERP) and
Electronic Data Interchange (EDI) migration to web based models; new IT frameworks
and integration with business strategy (strategic IT consulting); e-commerce training
services, business web site development and maintenance. The user side, e-commerce
means business.Some of the highlights of the domestic e-commerce scenario based on the
findings of NASSCOM’s survey include the following:
• Among user organizations, more than 90 per cent expressed keen awareness about the
increasing adoption of e-commerce and its potential benefits.
• More than 55 per cent of corporate respondents said that e-commerce transitions were
integral of their corporate plans. Of these nearly 85 per cent were industries which did not
have direct or frequent contact with end consumption.

• About 23 per cent of top 500 companies in India already have started some form of
e-commerce. These have been facilitated through the upgradation of existing IT systems
or fresh installations configured or e-commerce transactions.


The Government has been taking key initiatives over the past few years to create an
environment that is conducive to E-commerce activity. These include the following:

      Announcement of the Information Technology Act 2000 which put in place a
       cyber law regime in the country
      Announcement of the ISP policy for the entry of private Internet service providers
       in November 1998.
      Permission to private ISPs to set up international gateways. Permission of Internet
       access through cable TV infrastructure
      Initiation of the setting up of the National Internet Backbone
      Announcement of the national long distance service beyond the service area to the
       private operators.
      Complete non-monopolization of undersea fiber connectivity for ISPs on August
       15, 2000.
      Free Right of Way facility, with no charge in cash or kind, to access providers to
       lay optical fiber networks along National Highways, State Highways and other
      Permission for interconnectivity of Government and Closed User Group (CUG)
      The establishment of Public TeleInfo Centers (PTIC) having multimedia
       capabilities has been permitted.
      100 percent FDI has been allowed in B2B e-commerce.

Initiatives for E-Commerce Capacity-Building of Small and Medium Enterprises

There is a need to generate much greater awareness about e-commerce and its benefits.
An appropriate communication strategy needs to be formulated to spread e-commerce
awareness among enterprises by underscoring the benefits and dispel any
misconceptions. The apex industry bodies like the CII should coordinate with themselves
and the Government to educate people in decision-making positions in Indian
organizations. IT education would be a major driving force towards the development,
adoption and growth of e-commerce in India. To keep pace with the changing software
and hardware scenario it is necessary to emphasize on the current IT trends and develop
quality programmes to impart training and education in contemporary topics. Newer,
better and more effective methods of imparting education are evolving which will
supplement traditional methods of teaching using books, classroom lectures and written
exams on pen and paper. Using modern technologies like multimedia, online training and
testing etc., the emphasis is shifting to computer-based training which uses text, audio,

visuals and animation in interactive as well as self paced mode. IT education could be
encouraged by facilitating the setting up of institutes for imparting such education, by the
way of tax incentives, etc. The government could partner with business houses to
establish centers for IT training and education in a big way. Currently, 40 per cent of
India’s population is illiterate and only 20 per cent understand English. Since most of the
content in Internet is in English or other foreign languages, a large portion of the content
and applications is not accessible to a significant majority of the Indian population.
Creative solutions need to be thought of for overcoming this challenge. While, on one
hand local language content and applications need to be developed, on the other hand,
voice applications on Internet accessible through a normal touch tone telephone need to
be developed. The society as a whole needs to guard itself against the emergence of a
digital divide, where the section of the population with access to Internet gain significant
advantage over the others.


The CII and NASSCOM reports and many other businesses have observed that there are
some difficulties associated with the formation of online contracts in the present
formulation of the IT Act. It is argued that legal enforceability of electronic contracts is
open to challenge and legal jurisdiction of contracts involving international parties is not
defined. The Act is also silent on issues regarding taxation of electronic transactions.
Customs duty for cross border taxation, sales tax, etc. (indirect taxation) for goods and
services delivered electronically are not clearly spelled out. The jurisdiction of e-
commerce transactions is also not clarified. They have also pointed out that there is no
provision for dual-key pairs for individuals and businesses which can create some
difficulties for confidentiality of e-transactions. Other difficulties associated with the IT
Act relate to the cyber crimes which are not fully covered are an area of concern for the
growth of e-commerce. In this context it is also argued that Law Enforcement Agencies
are not fully equipped and trained to deal in cyber crimes. Safeguards to protect privacy
of personal and business data collected over the Internet are not covered under the Act.
Also the IT Act is silent on the issue of protection of intellectual rights (patents,
trademarks, copyrights) including domain names. Finally, payment gateways have to
evolve to a level that inter-bank settlement should be enabled through Real Time Gross
Settlement (RTGS). These are some of the barriers that have been identified and have to
be overcome, in addition to achieving higher Internet and PC penetration, for the growth
of e-commerce. The e-governance projects initiated by governments at various levels are
built around the following concepts: government wide information infrastructure,
reengineering of government processes, service delivery to citizens on commercial basis
and best practices. The web sites designed for information dissemination are in the
process of moving from the publish mode to the interact mode and then to the transact
mode. Establishment of Public Key Infrastructure for issuance of certificates to citizens
and government agencies, creating electronic payment gateways for accepting service
charges, involving banks and credit card agencies, and establishing service delivery
points are some of the important elements of e-governance. Finally, there is realization
and consequent emphasis that the digital divide in the country should be minimized; it
must not be worse than the existing gaps in other amenities such as the electric power or
supply of drinking water between the rich and poor, between the urban and rural people.

Effective policy framework has been outlined by the Indian government to bridge this
gap. It has launched community information centers that provide broadband Internet
access to population in the underdeveloped and underprivileged areas such as in the
northeast and hill-area states.


Private sector participation should be explored in e-developmental initiatives to ensure
their sustainability over the long run. There are several B2B players. Satyam has
developed an engine that can be used to develop platforms for any industry. The biggest
currently in operation is the steel industry The Steel Exchange, auto companies, are
coming together to form eax.com (auto exchange). Probably the biggest ‘internal B2B’
player is Maruti, which already does a large part of their supply-chain side purchasing
and dealer-networking online. Some other successful cases are: Hindustan Lever Ltd.,
General Motors and Godrej. The most well known B2B e-commerce technology, such as
i2 technology and CommerceOne, are yet to be adopted by Indian corporates. These
technologies are presently too expensive and may not result in any return on investment
due to lack of other infrastructure and services such as third party and fourth party
logistics in the country. There is still a lot that the government can do, starting with
resolving the inter-bank settlement standards to enable online payments. Next could be to
strengthen the telecom infrastructure (especially in the last mile). Another important thing
would be to recognize online contracts, which has now been done in India.
Some of the barriers to e-commerce adoption in India include the following:
• Limited Internet access among customers and SMEs (current level of internet usage is
low among businesses and users)
• Poor telecom and infrastructure for reliable connectivity (Internet connectivity slow,
access costs are high and connections are unreliable)
• Multiple gaps in the current legal and regulatory framework.
• Multiple issues of trust and lack of payment gateways (privacy of personal and business
data connected over the Internet not assured; security and confidentiality of data not in


A developing country can become industrialized and modernized if it can extensively
apply IT to enhance productivity and international competitiveness, develop e-commerce
and e-governance applications. An information-based society or knowledge based society
is composed of IT products, IT applications in society and economy as a whole. Many
countries in Asia are taking advantage of e-commerce through opening of economies,
which is essential for promoting competition and diffusion of Internet technologies. The
Internet is boosting efficiency and enhancing market integration in developing countries.
The developed world has had a long lead over the developing countries in the telecom
infrastructure. The world average of teledensity is 15 per cent compared to the developed
world average of 55 to 60 per cent. Same is true of PCs, Internet connections, and the
number of Internet hosts. All these traditional indicators for India as seen above are still
small. But the total numbers of Internet connections are large in absolute numbers. Large

enough to have a critical mass of 10 to 20 million users to be able to make an impact on
e-commerce and e-governance. In the next 3 to 5 years, India will have 30 to 70 million
Internet users which will equal, if not surpass, many of the developed countries. Internet
economy will then become more meaningful in India. The number of e-transactions will
be large enough to sustain the Internet economy.


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