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

Bangalore, Sept 19: Web portal Rediff 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.

The reasons for online shopping not catching on in the country are low credit card penetration and the high failure rate of 50 per cent 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 told PTI.

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

He rued that the concern in India was the political economy of telecom companies, which never attempted to invest in broadband as their returns are after 20 years unlike cellular phones, where valuation is based on 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."

On his reasons for e-commerce picking up pace in the near future, Balakrishnan said he was certain that the government would make 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 the weight behind it," he added.

PTI