ISAS Working Papers

The e-commerce sector in India has experienced remarkable growth in recent years with many new players entering the market. Its heady growth has attracted a huge amount of private equity investments from both domestic and foreign investors. Most of the investment has been made by foreign private equity investors. The present study attempts to explore the economic factors that facilitated the unprecedented growth of foreign investment in the sector. We model the empirical analysis by treating the equity inflows of foreign players in ecommerce as amounts dependent on the variation in the number of mobile and internet subscribers at the aggregate level. The study uses the OLS regression model with the time series data for the period from 2000 to 2016. The econometric analysis reveals that both mobile and internet subscriptions have a positive impact on the inflow of foreign investment into the Indian e-commerce sector. However, relatively, the impact is higher in the case of mobile subscribers than internet subscribers.