NEW DELHI: Mobile commerce is set for rapid growth in India, largely due to an anticipated combination of new technological developments and changing habits, a study has argued.

Trade body The Associated Chambers of Commerce and Industry of India estimated the Asian nation's retail sector is currently worth around $410bn annually.

At present, 67% of transactions are completed in cash, with the other 33% mostly attributable to the country's 173m credit card and 23m debit card holders.

Modern retailers, like supermarkets and convenience stores, account for 5% of sales and remain concentrated in cities, which only house 30% of Indians.

The number of terminals enabling payment by credit and debit card also stands at just 419 per million Indian consumers, with the former figure reaching 1,700 in China, 17,020 in the US and 24,611 in Brazil.

Compared with such low levels of scale, and 95m personal computers, there are now 846m mobile subscribers in India, and wireless penetration is pegged to achieve 100% by 2015.

"The ubiquitous mobile is surely the most promising channel," said DS Rawat, secretary general of ASSOCHAM.

"The need of the hour is to develop an innovative mobile payment system which is customised to the Indian ecosystem requirements and has a mass appeal.

"This wave of mobile money momentum - if facilitated by regulation and right business model - has the potential to revolutionise the payment system."

Although ASSOCHAM reported m-commerce has attracted a "small section" of the population thus far, rising smartphone uptake should boost public interest.

Rising affluence among India's strengthening middle class, containing approximately 300m people today, may prove equally advantageous.

Similarly, however, creating microfinance tools for consumers at the bottom of the pyramid could benefit shoppers and the firms serving them.

"Companies identifying this opportunity and leveraging available technologies and regulations to carve out mobile retail payment solutions that are suitable to Indian marketplace are set to emerge leaders in this space, leaving others behind," said Rawat.

The organisations ASSOCHAM noted would claim a key role in encouraging such shifts were the Reserve Bank of India, network operators, banks and technology providers.

The Reserve Bank of India has permitted 39 banks to roll out services in this area, and recently increased the amount which can be transferred through a mobile ten times over, to 50,000 rupees.

"The potential for mobile banking is enormous, but it will take its own pace to grow," said Amit Ahire, an analyst at Ambit Capital.

Telecoms giant Vodafone Essar has formed an alliance with ICICI Bank, and believes the industry is still at a highly nascent stage.

"Growth is slower than expected but it is too early and lot of time and resources need to be spent to educate customers on usage and security," Samaresh Parida, Vodafone Essar's strategy director.

He added the relevant players must overcome a "significant learning curve", alongside suggesting mobile finance is likely to expand more quickly than the equivalent on the traditional web.

Less positively, AP Hota, chief executive of the National Payments Corporation, warned intuitive platforms, and properties in various languages, are missing from the market.

"Mobile banking to most Indians is complex and too technical," said Hota.

Data sourced from ASSOCHAM/AFP; additional content by Warc staff