Courtesy: NDTV
India's Union Commerce Minister, Piyush Goyal, expressed concerns on Wednesday (August 21) about the fast growth of e-commerce in the country. He described it as a "matter of concern" rather than an achievement.
At an event launching a report on the impact of e-commerce on jobs and consumer welfare in India, Goyal highlighted the potential social issues that could arise from the sector's rapid expansion.
Goyal also questioned the excitement over Amazon's recent billion-dollar investment in India. He urged people to think about the effects of such investments. He said, "When Amazon announces a billion-dollar investment in India and we celebrate, we forget that this money isn't necessarily supporting the Indian economy." He pointed out that Amazon reported a billion-dollar loss that year, which he suggested might indicate predatory pricing. "If you lose Rs 6,000 crore a year, isn't that predatory pricing? They are an e-commerce platform, and they aren't legally allowed to do B2C, but people still buy from them. How are they doing it? Shouldn't we be concerned?" Goyal asked.
Goyal also raised concerns about the possible social disruptions caused by the rapid growth of e-commerce. He said, "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 in 10 years; it's a matter of concern."
He emphasized the need for a careful and thoughtful approach to the growth of the sector.
While acknowledging the role of e-commerce in India, Goyal expressed concerns about the pricing strategies used by some companies, questioning if "predatory pricing" is good for the country. He noted that e-commerce is taking away small retailers' high-value, high-margin products, which are crucial for their survival. Although e-commerce is here to stay, its impact on small businesses and the broader economy must be carefully monitored.
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On Wednesday, Union Commerce Minister Piyush Goyal expressed serious concerns about the fast growth of the e-commerce sector in India, especially criticizing the heavy discounting practices of major companies like Amazon. Speaking at the launch of the report titled 'Net Impact of E-Commerce on Employment and Consumer Welfare in India' on August 21 in Delhi, Goyal stressed the potential long-term effects of this growth, such as social disruption and negative impacts on traditional retail, which supports around 100 million small retailers in India. He emphasized the importance of considering the medium-to-long-term socio-economic impact of e-commerce growth.
Piyush Goyal Raises Concerns Over E-Commerce Growth, Criticizes Discounting Strategies
Goyal said, “I don’t deny that e-commerce has a role, but we have to think carefully about what that role is and how it can develop in an organized way. It shouldn’t be seen as a point of pride if half of our market shifts to e-commerce in the next decade; it should be a cause for concern.”
Amid the rise of e-commerce, Goyal criticized the extreme discounting strategies used by companies like Amazon, arguing that they harm fair market competition. He noted that while such discounts may seem beneficial for consumers in the short term, they can have serious negative effects on local businesses and the broader market.
Goyal pointed out that these steep discounts often force small and medium-sized enterprises (SMEs) to lower their prices to unsustainable levels, which could lead to their exit from the market. He warned that this could result in a monopolistic market where a few large companies dominate the retail sector, reducing competition and limiting consumer choices over time.
However, the report also highlighted that e-commerce has created significant employment opportunities, adding 16 million jobs across various fields like marketing, management, customer service, operations, and logistics. It also noted that e-commerce has provided twice as many jobs for women compared to other retail sectors. The impact has been particularly strong for vendors in smaller cities, with about 60% of them seeing increased sales and profits since moving online, and over two-thirds reporting higher sales value and profits in the past year.
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