Data privacy issues, online frauds growth hurdles for e-commerce

Issues related to data privacy and rising online frauds are emerging as significant hurdles in the growth of e-commerce in India, said the Economic Survey 2023-24.

Citing third-party data, the survey said that the e-commerce industry in India is expected to cross USD 350 billion by 2030 and called for the need to educate users on the safe use of e-commerce platforms.

“The rise of e-commerce is constrained by inadequate skills required for online selling, such as cataloguing. Data privacy issues and increasing online fraud have turned out to be the most significant hurdle in the growth of e-commerce in India. It becomes imperative to educate users on the safe use of e-commerce platforms,” the survey said.

The survey mentioned that India's e-commerce market has gained significant momentum during the past few years, owing to technological advancements, evolving new-age business models coupled with government initiatives like the Digital India program, UPI, One District - One Product (ODOP), Open Network for Digital Commerce (ONDC), new foreign trade policy, easing of FDI limits and Consumer Protection (E-Commerce) (Amendment) Rules 2021.

It has identified data privacy and cybersecurity as critical concerns in the digitisation of services in the country and called for adopting strong security measures, compliance with privacy regulations, and innovation, among others.

“Data privacy and cybersecurity have become critical concerns with the increasing digitisation of services,” according to the survey.

It said that the government is spearheading data protection laws and cybersecurity policies to safeguard consumer data and strengthen cybersecurity measures in the services sector.

“To further embrace technology with confidence, ensuring the adoption of strong security measures, compliance with privacy regulations, and fostering innovation in security technologies are essential,” the survey noted.

It said the future of e-commerce is built on the enhanced user experience through AI, seamless digital payment methods, innovations like UPI, and business engineering data analytics for business operations and enhancements.

The survey mentioned that the buyer ecosystem in India is evolving at a very sharp rate, and business models will need to innovate to serve the needs of a diverse shopper base regarding service expectations, price sensitivity and language requirements.

“Local language platforms are needed as the shopper base expands to tier-2 and tier-3 cities. Growing startups and innovative social media platforms provide an opportunity to test unique business models that might be targeted to specific demographic cohorts,” the survey said.