E-commerce can become a driver of growth across South Asia and boost trade between the region's countries, but its potential remains largely untapped, a new World Bank report said on Monday.

The report, titled "Unleashing E-Commerce for South Asian Integration" launched in the Capital, said that although e-commerce has grown significantly in South Asia, online sales accounted for a mere 1.6 and 0.7 per cent of total retail sales in India and Bangladesh -- compared to 15 per cent in China and nearly 14 per cent globally.

"E-commerce can boost a range of economic indicators across South Asia, from entrepreneurship and job growth to higher GDP rates and overall productivity," said Sanjay Kathuria, World Bank Lead Economist and co-author of the report.

"By unleashing its online trade potential, South Asia can better integrate into international value chains, increase its market access, and strengthen commercial linkages between countries across the region," He added.

Increasing the use of e-commerce by consumers and firms in South Asia could potentially help increase competition and firm productivity, and encourage diversification of production and exports.

A survey of over 2,200 firms in South Asia showed that the top concerns on cross-border e-commerce sales included e-commerce related logistics, e-commerce and digital regulations, and connectivity and information technology infrastructure.

"These barriers are significantly higher when trading with other South Asian countries. The main international e-partners of firms in South Asia are China, the UK, and the US and not other South Asian countries," the findings showed.

Small and medium enterprises in the region reported that removing regulatory and logistical challenges to e-commerce would increase their exports, employment, and productivity by as much as 20-30 percent.

"Some practical steps to strengthen online transactions include leveraging the reputation of large e-commerce platforms to offer consumer protection, return and redress, and data security as an initial substitute for robust contractual and consumer protection mechanisms, and permitting cross-border e-commerce payments," said Arti Grover, World Bank Senior Economist and co-author of the report.