India is currently in the midst of an e-commerce revolution. The arrival
of the Internet followed by the escalating growth of Web-based businesses is leading to e-commerce
both on the B2B and the B2C sides. The e-commerce trends in India are in perfect accordance with
the sweeping changes taking place in the global markets. Even the IT friendly Government has taken significant strides in the past few months to ensure that the economic
climate is ripe for e-business.
As per a Nasscom - McKinsey study 1999, India has the potential to earn
revenues worth US$ 10 billion by 2008 from e-business solutions. (Both the domestic and export
markets put together).
And the Indian players can achieve this goal by:
- Increasing their reach
- Establishing deep relationships
- And expanding the scope of businesses covered
As part of its survey on e-commerce, Nasscom also conducted a study on the
plans and capabilities of software companies in India. Some of the preliminary findings on e-commerce
/ e-business software exports potential are as follows:
The study revealed that Supply Chain Management optimisation and
Customer Relation Management are going to be one of the strongest drivers of the global e-commerce
solutions market. And more than 72 percent of Indian software houses were found to possess strong
expertise in Supply Chain Management and CRM.
Some of the areas of e-commerce services available are:
- Legacy application integration
- Internet application integration
- Migration to Web-based models
- New IT frameworks
- Integration with business strategies
- E-commerce training services
The projections of revenues from Internet and e-commerce related software and services exports were revealed as follows:
United States has already provided a three-year moratorium to not levy any tax on e-commerce transactions. While our Finance Minister has also announced that there will be no tax on e-commerce transactions in the fiscal year of 2000-01, it is imperative that a clear-cut policy of Government of India is formulated. The India government has formed a high-powered committee on electronic commerce and taxation under the Central Board of Direct Taxes. This committee is reviewing the various aspects of e-commerce transactions and technology transfer and evaluating whether these should be subject to income tax.
Nasscom has recommended a five-year moratorium on e-commerce transactions and also suggested a comprehensive study on the various issues involved, before a decision is taken to tax e-commerce. In fact, due to the global nature of e-commerce, it is suggested that India should support a permanent ban on taxes on Internet access, a permanent ban on custom duties on electronic transmissions, international tax rules that are neutral, simple and certain; and simplification of state and local sales taxes.