Online is 1.6% of retail sales in India: World Bank

New Delhi: Online sales in India accounted for 1.6% of total retail sales, with intra-regional trade in South Asia remaining low, the World Bank said on Monday. “While it has grown substantially in recent years, ecommerce in the region is still very small. Even in India, online sales as a percentage of total retail sales were only 1.6%, versus over 15% for China and around 14% globally,” said its report, ‘Unleashing E-commerce for South Asian Integration.’ Indian firms, which tend to be more digitised and heavily concentrated in service sectors, tended to highlight regulatory issues – such as tax rules, legal liability laws and data piracy challenges – as the top challenges to ecommerce, it said.

The World Bank said a survey of more than 2,200 firms showed that most of the cross border e-commerce was conducted with extra-regional partners, such as China, the UK and the US. Referring to various studies, it said mobile phones, electronic and computer accessories, clothing, footwear, fashion accessories and consumer durables were most traded in India. The bank said that while Indians and Pakistanis transact online significantly, the likes of Bangladesh and Nepal fare worse than many African countries on most ecommerce indicators. In addition, the pervasive lack of trust between countries in the region hurts trade.

Firm choice is distorted by existing regulations in South Asia. For example, in countries such as India and Sri Lanka, foreign multi-brand retailers cannot have their own inventory, and international giants like Amazon, Flipkart and Daraz must only operate as pure marketplaces. Cross-border ecommerce faces many hurdles, according to the study. “This may have consequences for market access for small firms with limited digital and logistical skills because it reduces the options available to these small retailers and producers,” it said.