India may be on its way to becoming an IT powerhouse, but e-commerce will take quite a long while to pick up here. While globally e-commerce revenues arc projected to touch $2.5 trillion in four years, in India e-commerce will generate only $6.2 billion. Leading research firm International Data Corporation (IDC), in its India’s 13th annual IT industry briefing session ‘Directions 201’, forecast that business-to-business (B2B) e-commerce opportunities will spearhead growth in this sector accounting for as much as 85-86 percent. The rest will be invested in the business-to-consumer (B2C) e-commerce. In fact, e-commerce is expected to help fledgling Internet companies shore up their bottom lines and earn profits.

For instance, investment bank Goldman Sachs is remodeling leading India internet portal Rediff to make it breakeven by September 2001. In a recent report, the investment bank says it expects the gross margins of Rediff to rise to 75 percent from the current level of 60 percent and net margins to be as high as 40 percent. According to Goldman Sachs, "Rediff will generate $5 million of revenue in calendar 2000, raising to $17 million in calendar 2001 and $88 million by 2003." The Rediff revenues will primarily be driven by content and advertising although the bank expects e-commerce to be meaningful in late 2003.

In fact, according to IDC survey, about 34 percent of the dot.com companies do not know when their business will become profitable.