E-commerce could fill half of that gap if India were able to replicate the explosion in Chinese online shopping, according to economists Pranjul Bhandari and Prithviraj Srinivas at HSBC. Internet penetration and online purchases in the world’s world’s second-most-populous country are today where China’s were about seven years ago. That’s also when Chinese e-commerce started booming, the economists wrote.
India, like China at that time, doesn’t have an organized network of brick-and-mortar retailers, making e-commerce a potentially powerful force for change. As many as 5 million villagers could set up shops online by 2025, reenacting rural China’s embrace of e-commerce on Alibaba Group Holding Ltd.’s Taobao platform, according to the report.
While India is still a cash-based economy, a push to give poor people access to banking has resulted in 220 million new accounts over the past two years. A rising young population is embracing new technologies, and mobile wallets are on the rise.
HSBC sees online sales–including services such as travel– jumping from $21 billion now to $420 billion in 2025. But that will depend on the success of government plans that include a push to modernize roads and expand broad bank connectivity, training programs for workers, and incentives to create startup companies.
The boom could create about 20 million new jobs. Taking into account the offline employment that could be lost in the process, Bhandari and Srinivas estimated the potential gain at a net 12 million jobs.