China’s e-commerce behemoth, Alibaba, is gearing up to expand across borders, and one of its most recent plans is to invest significantly in India’s e-commerce market, a sector that many believe will experience exponential growth this year. Such a move not only underscores the importance of e-commerce to the Indian economy, but also proves it’s one of the greatest economic drivers across the emerging markets.

Although e-commerce has been talked about for a while, the sector is starting to really heat up now.

“The game changer was the emergence of cheaper mobile computing devices such as smartphones and tablets,” said Michael Oh, portfolio manager of Matthews Asia Science & Technology Fund.

Before the advent of the smartphone, most Asian consumers, particularly those in emerging Asia, couldn’t really afford the traditional devices needed to access the Internet. Now, however, “you are seeing the rapid rise of Internet businesses in emerging Asia especially in China, India and Indonesia and you can buy nice, mid-end smartphones for below $100 in China and India,” Oh said.

That said, the overall penetration rate of Internet users in emerging parts of Asia still lags behind the more advanced economies like Korea and Japan, he said, which means there’ll be a healthy growth in the years to come and great opportunity for e-commerce companies and for investors.

Given the growing importance of e-commerce, though, and the success of so many e-commerce companies throughout the emerging world, Kevin Carter, founder of Big Tree Capital, took the initiative to put together a unique index composed entirely of top performing emerging market Internet and e-commerce companies and recently, launched the corresponding ETF.

Even though companies such as Alibaba and Baidu are household names within the investment community, it’s still not that easy for foreign investors to access them, Carter said, and that’s mainly because they don’t figure in the traditional emerging market indices. The EMQQ Index features 44 companies, many of which are Chinese, simply because “China is in the lead as far as e-commerce goes,” said Carter, who chairs the EMQQ Index Committee. However, it also includes Indian companies such as Info Edge India and MakeMyTrip, and the Brazilian online company Bitauto Holdings, whose ADRs trade on the New York Stock Exchange. It also includes companies from South Korea and Russia, among others.

The EMQQ Index illustrates the fact that “though Alibaba is a big deal, there’s a lot more going on in e-commerce and it’s not just about Alibaba,” Carter said. “Through our ETF, investors can also access e-commerce companies that are in frontier markets that they typically would not come across, because e-commerce easily spills across borders from emerging to frontier markets,” Carter said.

He gave the example of Mercado Libre, an Argentine company that is the “eBay/PayPal of Latin America” and though headquartered in Buenos Aires, Argentina was removed from the emerging market index and is now included in the frontier market index, trades on the NASDAQ and gets its revenues from “the tip of South America all the way to Mexico.”

Carter expects cross border e-commerce business to pick up this year. Alibaba is a big player, of course, but there are also other companies in different emerging market countries that have the clout and desire to expand, including Naspers, a South African newspaper company that has invested in Latin America and in Africa he said.

The e-commerce industry still very young without clear dominant leaders yet, said Oh, “therefore many established players will try to build their footprint to become the leader. This trend should continue.”

Oh, like many others who follow the development of the global e-commerce market, believes that the greatest growth this year will take place in China.

“China has become the world’s biggest e-commerce market and the growth this year should remain robust,” he said. “India is just starting out and compared to China, India’s e-commerce market is still in a nascent stage. However we are seeing strong private companies that are active there and lots of capital is flowing to India, so we can expect India’s e-commerce market to growth to remain strong.”

He also said countries like Indonesia, Thailand the Philippines will see strong growth in e-commerce this year as they start to develop a unique e-commerce culture “suitable for their own environment.”

Of course, building out physical logistics and convenient payment systems are key to the success of e-commerce companies. In most emerging markets the physical infrastructure is very poor, Oh said, but this presents both opportunities and challenges, as it offers online e-commerce companies an advantage in tapping into a consumer base living in second- and third-tier cities where physical stores are not available, even as building out good logistic channels to actually deliver the products will be a challenge. The building of convenient payment systems is also a challenge, he said, as financial institutions in emerging parts of Asia, and across the emerging markets, are still developing and don’t yet have the sophistication of their western counterparts.