STEG Working Paper

E-Commerce, and the Indian Retail and Manufacturing Sectors

Nibha Bharti, Sugandha Huria, Ashley Jose, and Kanika Pathania

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The sudden boom in the e-commerce sector (due to its key players) has been questioned in several economies in the world, particularly so in India. The country’s Traders associations have complained that the sector has been growing at the expense of the offline retail sector, primarily the MSMEs. In this context, this study is one of the first attempts to analytically evaluate the significance of booming online retail on India’s production economy (including both manufacturing and retail segments). The results indicate while e-commerce has assumed a significant role in positively impacting the sales of the overall retail and manufacturing sector of the country (on average) during the period 1992-2020, the same does not hold true for its MSMEs. The impact on MSMEs has been positive, though not significant – indicating the untapped potential for the country to take advantage of the growing online commerce. Similar results hold true for the overall retail and MSME retail when it comes to their GVC intensity. The findings advocate re-considering the country’s e-commerce policy, which is still in its draft stage presently.

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