E-com­merce mar­ket in In­dia seen hit­ting $200 bn by ’26

Mint ST - - CORPORATE - BY SOUMYA GUPTA soumya.g@livemint.com MUM­BAI

Smaller play­ers in­clud­ing Re­liance Com­mu­ni­ca­tions and Tata Te­le­ser­vices Ltd are be­ing forced to at­tempt to re­struc­ture debt and sell as­sets. Loss-mak­ing Tata Te­le­ser­vices is said to be pre­par­ing to shut a large part of its tele­com busi­ness, ac­cord­ing to a Busi­ness Stan­dard re­port that cited peo­ple it didn’t iden­tify.

“No In­dian bank is ready to fund the tele­com op­er­a­tors. No for­eign bank wants to do it,” Anil Am­bani, chair­man of Re­liance Com­mu­ni­ca­tions, told share­hold­ers on 26 Septem­ber. “There’s no fi­nanc­ing for growth. Pe­riod.” Anil Am­bani is younger brother to Mukesh, and the two broth­ers’ busi­nesses are in­de­pen­dent although they share spec­trum, tele­com tow­ers and fiber.

Re­liance Com­mu­ni­ca­tions faces a dead­line to restart pay­ments to lenders and is rac­ing to sell its spec­trum and real-es­tate as­sets to re­duce debt. A planned merger with Air­cel Ltd col­lapsed ear­lier this month, bogged down by de­lays and law­suits.

Con­sol­i­da­tion in the In­dian mo­bile in­dus­try is set to ac­cel­er­ate, turn­ing it largely into a three-player mar­ket ben­e­fit­ing top op­er­a­tors, CLSA an­a­lysts wrote in an 9 Oc­to­ber note.

Birla ad­mit­ted that the en­try of a large player with “deep pock­ets” had un­leashed a lot of up­heaval and all of Idea’s busi­ness strate­gies would need to take this en­trant into ac­count.

So when is the scathing price war ex­pected to end?

“It’s hard to say,” Birla said. “You are ask­ing the right ques­tions to the wrong per­son.”


In­dia’s e-com­merce mar­ket will grow at a 30% com­pound an­nual growth rate for gross mer­chan­dise value to be worth $200 bil­lion by 2026, ac­cord­ing to Mor­gan Stan­ley.

In a re­port ti­tled In­dia’s Dig­i­tal Leap–the Multi Tril­lion Dol­lar Op­por­tu­nity, Mor­gan Stan­ley said this growth in will help grow mar­ket pen­e­tra­tion to 12% from 2% to­day.

“Our anal­y­sis of some global e-com­merce com­pa­nies high­lights that two-thirds of the growth in their e-com­merce sales hap­pened due to new users com­ing on­line and shop­ping, while the bal­ance was driven by ex­ist­ing on­line shop­pers buy­ing more fre­quently and/or driv­ing up or­der val­ues,” the re­port said.

In­dia had 60 mil­lion on­line shop­pers in 2016, which is 14% of the in­ter­net user base of the coun­try. This will rise to over 50% by 2026, the re­port said.

“What we have seen through pro­pri­etary con­sumer sur­veys in the past is that it takes time for con­sumers to get com­fort­able with a chan­nel,” Parag Gupta, ex­ec­u­tive di­rec­tor, Mor­gan Stan­ley, said in an in­ter­view.

Growth, though, will still be led by the so-called “hor­i­zon­tal” e-com­merce play­ers such as Ama­zon and Flip­kart. “If I look at the way e-com­merce has evolved glob­ally, it is gen­er­ally the hor­i­zon­tal e-com­merce play­ers who have dom­i­nated,” Gupta said. “I be­lieve the sit­u­a­tion should not be very dif­fer­ent in In­dia, be­cause the cat­e­gories that be­come large in e-com­merce gen­er­ally hap­pen to be those that can be dom­i­nated by hor­i­zon­tals— elec­tron­ics and fash­ion.”

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