E-Business Hurdles in India
Like much of Asia, India faces large hurdles associated with e-commerce adoption

The Indian software industry is trying hard to contend with the global tech slowdown trend. Though the information technology industry has managed to make a name globally with its low-cost, high-quality enterprise, it is constrained here. A joint study conducted by NASSCOM and the Boston Consulting Group during the first half of 2001 highlights these facts.

The study groups India with other Asian nations that face big hurdles to e-commerce adoption. It talks about the limited Internet access among customers and small and medium enterprises and lack of reliable payment gateways. The current level of Internet usage in India is low among both businesses and individuals. Internet users have barely crossed the 5 million mark across the country. The current penetration of PCs and other devices to access the Net for individuals is less than 1 percent. Penetration of telephones is limited to less than 3 percent of the Indian population of over 1 billion.

Poor telecom and communications infrastructure for reliable connectivity is upsetting India's IT industry and government from facilitating extensive e-commerce adoption, the study says. The report also points out that the existing telecom infrastructure is unreliable. Internet connectivity is very slow and access costs are still very high. Businesses cannot influence these external factors and they desperately need government intervention.

The report also points out that the existing telecom infrastructure is unreliable. Internet connectivity is very slow and access costs are still very high. Businesses cannot influence these external factors and they may need government intervention. Gaps in the current legal and regulatory framework have been delaying decision-making at various levels. The legal jurisdiction of contracts involving international parties is not defined. What's more, the IT Act does not clarify all the issues regarding taxation of electronic transactions. It is also silent on the issue of protection of intellectual property rights such as patents, trademarks, and copyrights in the Internet space.

Safeguards to protect privacy of personal and business data collected over the Internet are not in place. Industry officials are concerned about the security and confidentiality of their data. Transactions cannot be completed online due to a lack of convenient online payment solutions. This is because information flow between banks is still not completely online.

The government will have to reverse the trend and catch up with the global movement towards e-commerce. For this, they government needs to make these external factors a top priority for a quick adoption of e-business by Indian companies. Delay in e-commerce adoption could cause them to lose their competitiveness. The government urgently needs to address the key factors that can turn around the situation for better. It has to first resolve legal and regulatory issues for e-commerce transactions and accelerate development of communication infrastructure.