Union Minister raises concerns about the rapid growth of e-commerce firms in India

On Wednesday, August 21, Union Commerce Minister Piyush Goyal questioned whether the swift growth of e-commerce firms in India was something to be proud of or a “matter of concern”. Goyal made these comments in response to a research that projected the e-commerce industry will develop significantly over the next ten years.

“Are we going to cause huge, social disruption with this massive growth of e-commerce? I don’t see it as a matter of pride that half our market may become part of the e-commerce network 10 years from now; it is a matter of concern,” Piyush Goyal said, Moneycontrol reported. ‘Net Impact of E-Commerce on Employment and Consumer Welfare in India’ is the headline of the study that the minister said during its unveiling.

The Effect of E-Commerce Firms in India on Small Retailers

Piyush Goyal made it clear that he does not oppose the e-commerce sector, which is here to stay, but he did emphasize that its function has to be more logically formed. The minister pointed out that not all retail industries are dominated by e-commerce and that a small percentage of people use these online channels to purchase food and groceries.

Piyush Goyal noted the role played by the e-commerce sector in the nation but emphasized the need to thoroughly examine and structure that function.

“We have to think carefully about what that role is and how it can be more organised. Is predatory pricing policy good for the country?” he questioned.

Piyush Goyal went into further detail about the worries about predatory pricing and questioned the excitement over large investments from firms such as Amazon. He argued that the Indian economy could not actually gain as much from these investments as it would appear.

“When Amazon says we are going to invest a billion dollars in India and we celebrate, we forget the underlying story that this billion dollars is not coming for any great service or investment to support the Indian economy,” the minister argued. He also questioned the legal system that governs these businesses’ activities, namely how they are able to absorb such large losses.

“They made a billion-dollar loss in their balance sheet that year, they had to fill in that loss… If you make Rs 6,000 crore loss a year, doesn’t it sound like predatory pricing to you? They are, after all, an e-commerce platform; they are not allowed to do B2C legally. However, in reality, all of you buy on these platforms. How are they doing it? Should it not be a matter of concern for us?” Goyal asked.

The minister of commerce expressed sadness about the declining number of small mobile stores and also brought attention to the negative impact of e-commerce on small merchants, as opposed to giant retailers like Apple.

“How many mobile stores do you see now on the corner? And how many were there 10 years ago? Where are those mobile stores? Will only Apple or the large retailers sell mobile phones and their accessories?” he questioned.

In closing, Goyal issued a warning about the potential disruption that India’s 100 million small shops will have to deal with, given that e-commerce’s market share is growing at a rate of 27 percent annually. He emphasized the need to make sure that technology’s benefits are felt by a larger portion of society while using it for innovation, empowerment, and meeting customer expectations.

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