E-commerce industry does not get FDI clarity, but optimistic on Goods & Services Tax

The Hindu Business Line

Companies bank on better infrastructure

MUMBAI/BENGALURU, FEBRUARY 28:
E-commerce sector may be buzzing with deals and sales, but it did not sizzle on the Budget day.

The only bright spark for $15 billion industry was the Government’s commitment to implement the much delayed GST by April 2016.

Apart from the GST promise, incentives for credit and debit card transactions and investment in roads infrastructure will indirectly contribute to the sector’s growth, said Ashish Jhalani, Founder of consultancy firm E-tailing India.

GST clarity
GST will help e-commerce companies rationalize supply chains by addressing the taxation issues. In addition steps announced But as Dinesh Agarwal, Founder & CEO, IndiaMART.com, points out, “There is no clarity on the implementation of GST. The industry needs a single, common tax regime at the Centre for all e-commerce transactions.”

Finance Minister Arun Jaitley also announced plans to address infrastructural challenges, to improve connectivity in the hinterlands under the Digital India Program by accelerating the roll out of NOFN (national optical fibre network) across all 2.5 lakh village.

“If these plans can be effectively executed on the ground, it will provide a fillip to the digital/ ecommerce sector,” said Ashvin Vellody, Partner, Grant Thornton.

Kunal Bahl, co-founder and CEO, Snapdeal.com added that the Government should build a framework of measurable metrics to continuously monitor and augment the policy.

E-commerce firms will benefit from a better infrastructure, which will help them reach their customers faster. Similarly, the announcement of RuPay credit and debit cards will lead to a cashless economy thus boosting the ecommerce transactions and its dependence on cash on delivery, says Jhalani.

“Now e-commerce players will not have to incur the extra cost, time and risk of COD (cash on delivery) payments, as and when all-card transactions become a reality,” added Agarwal. But apart from their bright spots, the larger disappointment among the companies is evident. Sitakant Ray, founder of price comparison site MySmartPrice said, “For ecommerce in particular, while the dream of a tax holiday or FDI hasn’t come true.”

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