New Delhi: With the backing of global investors for e-commerce companies, India has become the second-largest global venture capital investment hub for digital shopping companies in 2021 after the US.
The Indian e-commerce segment registered a whopping growth rate of 175 per cent and reached $22 billion from $8 billion in 2020.
The US which attracted $51 billion investments came first followed by China at third position with $14 billion and the UK at fourth position with $7 billion according to the London & Partners analysis of Dealroom.co investment data.
The data also indicates that the US and India are two of the world’s leading hubs for digital shopping companies with high levels of global investment and unicorns.
The reason for this kind of investment may be attributed to increasing demand for online purchases during a series of lockdowns across the world during the Covid-19 pandemic.
Within India, Bengaluru was on top globally with $14 billion worth of Venture Capital (VC) investments in digital shopping in 2021, followed by Gurugram at No. 7 with $4 billion and Mumbai at No. 10 with $3 billion.
The data also shows that Bengaluru ranked number five among cities with the potential for future unicorns, just behind London.
Three of the 15 global cities with the highest count of current unicorns are in India Bengaluru at No. 6 with 19 unicorns in 2021 (up from three in 2020, Gurugram at No. 7 with 13 unicorns (up from 3 in 2020) and Mumbai at No. 14 with 7 unicorns.
London is the leading European hub for digital shopping investment, with a record $5 billion raised by digital shopping companies based in the capital in 2021.
Overall, global venture capital investment into digital shopping more than doubled in 2021 following a significant consumer shift to e-commerce platforms during the pandemic. The total global VC investment for 2021 stood at a record $140 billion, up from $68 billion in 2020.
India’s e-commerce market is likely to surpass $120 billion in transactional value, a study by FIS, an American financial technology company, forecasts. Between 2021 to 2025 the ecommerce market is expected to grow by 96 per cent, the growth driven by an increasing shift towards digital payments, according to the 2022 Global Payments Report by Worldpay from FIS, which offers a snapshot of the global payments landscape.
Riding on the global sentiment, Indian consumers are relying more on mobile commerce than desktop ecommerce. Globally, the transaction value from mobile devices accounted for 52 per cent of all e-commerce spending in 2021.
In India, consumers preferred to use digital wallets 45 per cent of the time, over debit, credit and charge cards for e-commerce payments, a trend common in Asia Pacific countries including China, Indonesia and the Philippines.
Regional wallets such as Paytm in India, and WeChat and AliPay in China, are major factors for this, as they facilitate a diverse and competitive payments ecosystem in these countries.
While cash is still the leading in-store payment method in 2021, responsible for 37.1 per cent of transaction value, digital wallets are projected to overtake cash as the most popular in-store payment method by 2023, when they are expected to account for 30.8 per cent of point-of-sale (POS) transaction value. India’s POS market is expected to grow by 28.8 per cent to $1.08 trillion between 2021 and 2025.
In the backdrop of the Covid-19 crisis, while global investments depict a decline in Foreign Direct Investment (FDI) inflows, Indian prospects are bright owing to its sustained long-term growth trend.
According to the UN Conference on Trade and Development (UNCTAD), India’s large market and positive economic growth in the post-pandemic period will draw investments to the country.
–IANS
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