E-Business in India

  • Post last modified:4 March 2024
  • Reading time:10 mins read
  • Post category:Business / E-Business
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Origin of E-business in India

E-business refers to the sale and purchase of goods and services over the Internet. E-business has changed the traditional way of doing business. More and more business organizations are switching to e-business to avail its benefits.

The growth in technology, reduced cost of Personal computers (PC) and widespread use of the Internet are some factors that have fuelled the growth of e-business in India. More and more business organizations are becoming aware of the opportunities offered by e-business. Shortly, the implementation of e-business is expected to grow further in various sectors in India.

The use of the Internet in various domestic sectors is increasing every year in India. According to the Internet and Mobile Association of India (IAMAI) and IMRB International, the figures for Internet users in India have shown a continuously increasing trend in the last decade.

As a response to the widespread use of the Internet, e-business has also grown at a very fast rate in India. Online shopping shows unlimited potential in India with 288 million people belonging to the middle class. At present, travel portals share a very high percentage of the Indian e-business market.

The travel portal, makemytrip.com has attained a market share of approximately Rs. 1500 crore. This is 16% of the total e-business market in India. Annual growth of approximately 54% for travel portals has been estimated for each year.

According to a popular business magazine, the total B2B transaction in India for the year 2010–2011 could be US $150 billion and B2B marketplaces could account for $35 to $50 billion out of $150 billion. India’s largest B2B portal, tradeindia.com has also stated that e-business transactions in India show a growth rate of 30% to 40%, and will soon reach $100 billion. Presently, e-business plays an important role in the multimedia, entertainment, and fashion industry. With the emerging market of e-business, big foreign brands are looking forward to entering the Indian market to sell their products. There are approximately 1000 B2B exchanges in India.

In addition, online services, such as ticketing, banking, tax payment, bill payment, hotel room booking, entertainment, online games, matrimonial sites, and job sites are growing day by day in B2C transactions. Ordering gifts as well as birthday cakes on the Internet has also gained popularity. Undoubtedly, the overall value of B2B transactions is greater than that of B2C transactions. This is because the B2B transactions are comparatively of greater value than the B2C transactions.

E-Transition Challenges for Indian Corporates

The process of electronic sale or purchase of goods and services between two or more parties, such as businesses, households, individuals, and governmental organizations, is known as e-transaction. In other words, an e-transaction system involves two or more entities in the exchange of information concerning trades, payments, services, and communication architecture through which the customer can communicate with the service providers.

In an e-transaction system, a client submits the request on behalf of a user to an Application Server. The server then processes the request with the back end (the database) and returns the results to the users.

The e-transaction system ensures that whenever a client submits a request, the Application Server provides a corresponding result until the transaction is not terminated. If the transaction is interrupted, the server may provide aborted results.

Let us discuss some e-transaction challenges faced by Indian corporates:

Bureaucratic Disputes

A major challenge to adopting e-business comes from the fear of employees that their traditional ways of doing business will be replaced with newer ways. This resistance to change hinders the adoption of e-business initiatives by organizations.

Cultural Changes

To implement e-business initiatives, an organization needs to hire young and technically sound people to perform various processes related to e-business. In general, the young staff is more inclined towards maintaining an open culture than senior employees, which might make them insecure and resistant to such changes.

High Cost of Implementation

E-business initiatives require a high cost of financing for both hardware and software. Businesses would need computers with an Internet connection to perform business transactions. In addition, they also require to purchase and implement the necessary software for implementing e-business solutions.

Describing the Problems in E-cash

With the use of e-cash, the e-transaction of money between consumers and sellers has to come very fast; however, there are also some problems associated with its usage. The major problem is that the double spending of money by a consumer cannot be prevented or detected. Double spending is a mode in which there is a possibility to spend a token of money twice.

The bank provides some form of money as a digital token or token money. After spending this token, the consumer can reuse this token in another transaction. This is possible because after spending the token in a transaction, the token does not remove the data from its original holder. The aforementioned problem can be solved partly by providing unique serial numbers to e-cash.

The seller can verify the serial numbers with the bank to ensure that the serial number has not been used previously in any other transaction. The bank can match the serial number of the e-cash provided by the seller with other e-cash transactions. With the help of this validation process, the bank can prevent fraudulent transactions. In case of double spending, the banks can identify the token that is being reused to make a transaction.

Maintaining Privacy

In an e-transaction, it is very important to maintain privacy. Therefore, the bank and its customers are required to keep e-cash and its associated serial number, which is digitally signed by the bank. The serial number is selected by the customer randomly, which should be large enough to avoid duplicity. The customer can also apply a multiplier algorithm to the serial number and send a new multiplied number to the bank.

When this multiplied serial number is received by the bank, it verifies it and assigns a private code to the number, which is sent back to the customer. The serial number or the multiplier that is used to generate the serial number is never known to the bank. The retaining policy of the bank signature on the unknown serial number is known as a blind digital signature.

The consumer is also responsible for maintaining records of the generated serial number and the multiplier algorithm, which is used in e-cash. The maintenance of these records is important to keep track of the spending of the e-cash. When a consumer uses this e-cash to purchase goods, the serial number of the e-cash is transferred to the respective bank.

This verifies the generated serial number and authenticates the consumer, who is using e-cash for the transaction. The bank stores the records of the transactions that are made using e-cash and uses these records to verify whether or not the e-cash is spent more than once.

Article Source
  • Glover S., Liddle S., Prawitt D. (2001). E-business. Upper Saddle River, NJ: Prentice Hall.

  • Gupta V. (2006). E-business. New Delhi: Research Book Center.

  • Khosrow-Pour M. (2007). Utilizing and managing commerce and services online. Hershey, PA: Cybertech.

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