Budget 2022: Developing logistics, delivery capabilities in tier II, III cities can boost e-commerce

E-commerce has seen exponential growth recently, aided of course by the COVID pandemic which has fundamentally redefined our lives. In India though, this has been accompanied by increased internet and smartphone penetration in the urban and rural landscape, and the e-commerce market is expected to grow to $111.40 billion by 2025 from $46.2 billion as of 2020. By 2030, it is expected to reach $350 billion. Digital continues to drive growth for the industry in domestic as well as export markets.

This year’s Budget expectations are primarily focused on strengthening infrastructure in the country to revive the economic state. This will directly impact eCommerce as well in a big way. Ecommerce is hoping for better roads, railways, warehousing, cold storage facilities, and shipping ports so that they can ensure on-time deliveries and hassle-free returns. This will inherently stimulate demand for e-commerce, and dramatically increase the geographical presence of D2C companies.

Developing the logistics and delivery capabilities in tier II and tier III cities can also encourage more people to start their own independent eCommerce businesses.

Small business owners were hit hard during the lockdowns in 2020 and 2021. Even though Budget 2021 had extensive relief packages for MSMEs, there are expectations for more relief measures in Budget 2022. Some measures include a tax relief on personal income tax leaving more money for household consumption.

Perhaps the most significant procedure is to urge homegrown financial backers to give subsidies to such D2C brands. The people who put resources into green new companies can be offered charge exclusions or motivations to do as such. This would essentially drive interests into the area and lead to more noteworthy commitment of reasonable brands to the general GDP.

From a startup ecosystem perspective, relaxation in taxation laws and further simplification of compliances would help founders focus on other aspects of the business. Easier government and bureaucratic processes for startups would encourage and help more individuals in starting their own businesses. Tax SOPs or benefits during merger and acquisitions especially for startups in the retail and service sector would be a big help as well. Budding entrepreneurs will have a lot more options to make good monetary returns out of their business while at the same time creating employment and helping the economy.

One major challenge facing businesses engaged in consumer goods is the margin shrinkage due to high freight costs and manufacturing dependency on China especially post-COVID. ‘Make in India’ will hence go a long way in helping Indian brands scale up and hopefully even establish a global presence. We expect a strong push from the government’s side to further the cause of manufacturing in India by investing in skill development especially among the youth residing in Tier II, Tier III, and rural India. As we inch closer to the ‘Digital India’ dream, relevant skill development could generate up to 90 million jobs in India.