In its report, the company has also expressed that there are chances that a vibrant offline to online model will soon emerge in India which will give the e-commerce section a boost in the long run.
According to a new report released by American multinational investment bank and financial services company Morgan Stanley, the e-commerce sector in India will be worth USD 200 billion by 2027.
It added that the new FDI regulations exposed by the government will also ensure that those e-commerce companies which have FDI holdings will have to operate as pure marketplaces and that such companies will not have any equity interest or control on seller entities or mandatory exclusivity clauses.
“We believe these regulations will pose headwinds to growth in the near term as some prominent companies restructure their businesses, processes, and contracts, to be compliant,” Morgan Stanley’s report said.
The report also talks about how the overall retail market was growing and how various factors like attractive pricing, convenience, and aggregation of demand have lead to online companies taking away market share from offline channels.
In its report, the company has also expressed that there are chances that a vibrant offline to online model will soon emerge in India which will give the E-commerce section a boost in the long run. “We now believe our previous India e-commerce sales estimate of USD 200 billion by 2026, could get pushed out by a year,” it said.
According to the new FDI rules which were applied from February 1, online marketplaces having foreign investments have been barred from selling products from sellers in which the online marketplaces hold a stake.
The Morgan Stanley report on e-commerce in India also noted that the new rules have increased the cost of doing business and also increased uncertainty for companies like Amazon and Walmart that have acquired Flipkart.
However, the report maintained that in the overall context, the potential impact of the new regulations will not be significant.