Budget 2020: What will impact Amazon, Flipkart, Paytm, other e-tailers?

Last year saw two global behemoths - Walmart and Amazon - lock horns for dominance in Indian e-commerce market. Meanwhile, India's largest conglomerate, Reliance Industries pulled its socks to enter e-commerce industry. However, the sector has been rocked by decline in consumer demand and uncertainty over policies. Now the sector is hoping for some good news to come out of Union Budget 2020-21.

E-commerce players such as Amazon, Flipkart, Paytm and other will be listening closely as Finance Minister Nirmala Sitharaman presents her second Budget Speech shortly from now. The primary expectation is to have some clarity on the new e-commerce policy. Incentives under the Make in India initiative and even steps to boost exports will also be welcome.

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The e-commerce industry will also be waiting for steps to revive consumer demand. To this end, personal tax cuts and measures to increase take-home salaries will be cheered by e-tailers. They will also be waiting for announcements to bring parity between online and offline retail segments in terms of taxation.

Clarity on policies

The new e-commerce policy has been in the pipeline for some time now, but is yet to be implemented. The Finance Minister could shed some light on the new policy framework for e-commerce companies. This will go a long way in ensuring stability for existing and new players in the segment, encouraging growth in the industry.

Data privacy norms are another sticking point for the e-commerce sector, which online retailers expect FM Sitharaman to address today.

"The government has in the past demonstrated policy support for the start-up ecosystem to become an engine of economic growth and job creation and it is necessary that we maintain the momentum as we look to chase the $5 trillion GDP benchmark," said Rahul Garg, CEO & Founder, Moglix.

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Reviving demand

Economic slowdown has sapped off consumer demand across sectors, and e-commerce is no different. Proposed measures to increase purchasing power, including personal tax cuts and reduction in PF contribution would be cheered by the online retail segment too. Boosting manufacturing output, coupled with measures to increase take-home salaries, will also be closely followed by the e-commerce industry.

"I hope the tax limit is reduced on income above Rs 5 lakh. While any taxation changes will not impact CTCs, it will definitely improve purchasing power. More money in the hands of consumers will boost demand for goods and services including those offered by Internet companies which will, in the long run, benefit the economy. These moves will be a game-changer for the industry and we are looking forward to the budget 2020," a Snapdeal spokesperson said.

Easier digital transactions

Digital transactions have grown in India over the past few years on the back of government initiatives and better digital infrastructure. Government recently introduced zero MDR for transactions via RuPay and UPI for encouraging digital payments. The e-commerce industry will eagerly wait for announcements regarding digital transactions as they will not only help bring online shopping to tier-II and III cities, but also prove crucial for fintech start-ups.

Online-offline parity on GST

The e-commerce industry is hoping that FM Sitharaman would introduce some parity between online and offline retailers in terms of GST regime. The GST framework omits several benefits for e-tailers that are otherwise provided to brick-and-mortar retailers. Equilibrium between these two channels would encourage more offline retailers to go online and enhance their reach.

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