Computers Today June 1998 Master File: Oh, There's the Sprout

E-commerce is taking shape in India, as it moves from an official endeavour to a low-cost, big-reach medium for corporate transactions

Early this year, Chennai-based Satyam Infoway (P) Ltd. announced it is implementing a pilot project for the Indian automobile industry, represented by the Automotive Component Manufacturers Association and the Association of Indian Automobile Manufacturers. Called Autopilot, the project will network automobile manufacturers, component suppliers, and dealers with an electronic data interchange (EDI) application, and speed up the transaction cycle in the industry.

Last month, Tata IBM Ltd. provided the infrastructure to ABB India to set up an intranet connecting to ABB worldwide. ABB says, after the implementation, the drawing approval cycle has been cut to half at ABB Durgapur.

At Bangalore, Manipal Control Data Electronic Commerce Ltd. (MCD), a collaborative venture with Control Data Systems, USA, has started offering e-commerce services. The backbone for the service is the MCDNET, with centres at Mumbai, Bangalore and Delhi. One of their early customers is Vero President, Bangalore, makers of modular enclosures for electronic products, for whom MCD will implement an e-commerce system. It will, through a Web page, provide information on Vero's products to customers. It will process a customer order, and provide him with a delivery schedule and status of manufacture.

The implementation of such systems in India today point to the acceptance by corporates in conducting business-to-business transactions over electronic networks.

This trend is even more significant in the light of the EDI Council of the Ministry of Commerce announcing last month the government has initiated steps for a comprehensive and time-bound adoption of EDI technology by all departments and organisations involved in foreign trade.

Making Cars on the Net

Chennai-based Satyam Infoway (P) Ltd. is implementing a pilot project for the Indian automobile industry, represented by the Automotive Component Manufacturers Association and the Association of Indian Automobile Manufacturers. Called Autopilot, the project will network automobile manufacturers, component suppliers, and dealers with an electronic data interchange (EDI) application, and speed up the transaction cycle in the industry. The project covers 11 companies—Bajaj Auto, Telco, Mahindra & Mahindra, Ashok Leyland, Mico, Shriram Pistons, Sundaram Clayton, Sundaram Fasteners, Lucas TVS, Remsons Industries, and Brakes India. Other wide area network (WAN) service providers such as Mahendra Network Services and Global Telecom Services, besides VSNL, are also participants in the project. A connection between the three service providers has already been established through a special gateway provided by VSNL.

According to Padma Chandrashekharan, vice president, Satyam Infoway, the project will evolve standard document formats and fields specific to the automobile industry. Satyam is working with a major auto maker to post an Internet-based catalogue of about 75,000 parts, which will help dealers and executives of the company view, select, and order parts. The Indian auto industry comprises about eight OEMs, hundreds of component manufacturers, and a vast network of dealers.

The pilot study is designed to evolve a common approach to EDI documentation formats, ensure interconnectivity between different WAN service providers so that a component maker is not constrained to access the same service provider that the OEM uses, and sort out legal issues about documents exchanged electronically.

EDI, or the intercompany computer-to-computer communication of standard business transaction in a standard format, is gaining impetus not only as regards domestic business transactions, but also for overseas transactions.

According to Amitabh Kumar, director (Operations), Videsh Sanchar Nigam Ltd. (VSNL), VSNL was the first to offer EDI infrastructure in the country. VSNL installed the EDI system in Mumbai with access nodes at New Delhi, Calcutta, and Chennai in 1993 and offered this service to potential users. He adds that VSNL tried to induce major users such as Customs and Port authorities and corporates to adopt EDI for their business transactions. An extensive awareness campaign was undertaken. Though it could not bring real benefits, it did generate significant interest in major trading communities, he elaborates.

Currently, VSNL's major customers are the port trusts including Jawaharlal Nehru Port Trust, P&O Shipping, Maersk, ERDC Calcutta, Samrat Shipping and also BHEL.

The other major player offering VAN infrastructure (over which EDI services are offered) is National Informatics Centre. Private VAN operators including Global Telecom Services Ltd., Mahindra Network Services, and Satyam Infoway offer EDI and other VAN services in tie-ups with General Electric Information Systems, Singapore Network Services Pte Ltd., and Sterling USA, respectively.

According to the software industry forum, NASSCOM, EDI services are initially integrated into industry operations through the purchase function. EDI is the preferred mode of business in the automotive, railroad, chemical and pharmaceutical industries. There is a push to integrate EDI in paper products, metals, oil and gas, chemicals, grocery, office products, warehousing, rails, trucking, ocean freight, pharmaceuticals and medical supplies industries.

The Ministry of Commerce started EDI implementation in 1995-96, in some of the Customs houses and the Director-General of Foreign Trade. Kochi is now the first Indian port to implement EDI transactions. The system at Kochi is based on the UN/EDIFACT (EDI For Administration, Commerce and Transport) standard, accepted worldwide. Kochi had entered into an agreement with Satyam Infoway for trial runs of the EDI system. With these trials having been concluded successfully, Satyam Infoway may bag the contract to put the system into place, finally.

With major international ports such as Singapore, Colombo, Hong Kong and Dubai already using EDI, and with Singapore announcing all its trading partners should switch over to EDI before the year-end, or risk losing business, the Ministry of Commerce's directive that all ports should be brought within the EDI network before the year-end assumes greater urgency.

While the benefits of using EDI are apparent (less cost because of paperless transactions, reduction of errors at the data-entry level), legal issues still need to be resolved, points out Amitabh Kumar. Indian laws of evidence do not accept electronic data as evidence, he elaborates. Financial transactions conducted electronically, with no hardcopy backup, would therefore not be admissible as evidence in a court of law.

Yet, the corporate user, especially one with overseas transactions, cannot afford to ignore this mode of transacting business. The Ministry of Commerce quotes a World bank consultant as saying that it is becoming apparent that buyers and airlines would be unable to do business with companies in India unless EDI links are available.

NASSCOM estimates that the Indian market for EDI solutions and services would cross the Rs 500-crore mark annually by the year 2000. To tap this potentially large domestic market, many players have ventured to offer e-commerce services. These services could range from providing equipment to systems integration, from consultancy to services, from translators to editors. According to NASSCOM, at least 75 companies are in the fray. They include CMC Ltd., Infosys, Digital Equipment (I) Ltd., Wipro Infotech, Tata IBM, Verifone, Manipal Control Data Systems, Satyam Infoway, Microsoft, and Oracle.

E-commerce in India is not all about EDI services, or business-to-business commerce conducted electronically. Business-to-consumer electronic transactions are also coming into view, due to the spread of Internet usage.

Internet connections in the public domain countrywide today number about 60,000. Also, many Indian businesses and institutions are placing their home pages on the Net. These include government departments, state governments, NGOs, financial organisations and trade councils. As a beginning, all they do offer is access to information. But, trade councils and financial institutions, in particular, offer entrepreneurs the opportunity of trading in the country/state.

Corporates such as Hindustan Lever offering recruitment opportunities, grocery stores such as bababazaar.com , and theatres offering seat bookings over the Internet are examples of busines-to-consumer commerce online. Though still few in number, they indicate that businesses are not afraid to take the plunge into e-commerce. And people are willing to try out such modes of purchase, as an experiment at first, and with more conviction later, if the systems work.