e-commerce in India has not taken off as expected: Rediff

Web portal Rediff today said e-commerce in India has not yet taken off in as big a way as it expected, but it hopes the government's commitment to creation of "back-hall" broadband infrastructure would give a fillip to online shopping in the country.

Web portal Rediff on Sunday said e-commerce in India has not yet taken off in as big a way as it expected, but it hopes the government's commitment to creation of "back-hall" broadband infrastructure would give a fillip to online shopping in the country.

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The reasons for online shopping not catching on in the country are low credit card penetration and the high failure rate of 50% in the case of debit card transactions, Rediff Founder and CEO Ajit Balakrishnan said.

"Debit card-based e-commerce is possible,though there are challenges. Broadband connectivity between banks is just building in India. Unless the banks' telecom infrastructure is super, it can't be pulled off. There are 120 million Indians with debit-plus-ATM cards," he said.

With e-commerce, the challenge is margins and so, there has to be a payment system where it is no more than 3%. "If the operator keeps 50% it is not worth business," Balakrishnan said.

He rued that telecom companies did not make timely investments on broadband, as returns only started to accrue after 20 years, unlike cellular phones, where valuation was based on the number of subscribers.

"In every country, you find when broadband picks up, that's when e-commerce picks up. When e-commerce picks up, then advertisement picks up... This is not happening in India," he said.

Nevertheless, expressing confidence that e-commerce would pick up momentum in the near future, Balakrishnan said he was certain the government would make the necessary investments to create back-hall infrastructure for broadband.

"There's also a TRAI plan to spend Rs 35,000 crore. I think we need to put weight behind it," he said.