Centre Warns of E-Commerce Risks to 100 Million Small Retailers Amid Rapid Growth

In a recent statement, Union Commerce and Industry Minister Piyush Goyal has highlighted significant concerns regarding the unchecked expansion of e-commerce in India. Speaking on Wednesday, Goyal warned that the rapid growth of e-commerce platforms could lead to “huge social disruption” and severely impact the livelihoods of 100 million small retailers across the country.

The Minister’s comments were made in light of the Pahle India Foundation’s report titled “Net Impact of E-Commerce on Employment and Consumer Welfare in India.” The study has prompted the government to reassess the e-commerce landscape, with Goyal suggesting that the phenomenon could mirror past disruptions seen in Western countries.

Goyal criticized multinational e-commerce giants, such as Amazon, for employing what he described as predatory pricing tactics to dominate the market. He expressed concerns about the long-term implications of such practices, including their impact on local businesses and the broader economy. The minister noted that these companies often report significant financial losses, which he attributes to aggressive pricing strategies rather than genuine investment in the Indian economy.

Indian regulations currently restrict multinational e-commerce firms to operating as platforms that merely connect sellers and buyers, without engaging directly in business-to-consumer transactions. This legal framework is designed to prevent these companies from gaining undue market power. Despite these regulations, Goyal accused these firms of finding ways to circumvent the rules and questioned the role of significant financial losses reported by these companies.

The e-commerce sector in India, which was valued at $22 billion in 2018 and is projected to grow to $350 billion by 2030, is dominated by major players like Amazon and Flipkart. Goyal specifically criticized the impact of online pharmacies and mobile phone sales, highlighting concerns about the potential for unverified drug sales and the decline of local phone repair shops.

Goyal emphasized the need for technology to be harnessed in a manner that benefits all segments of society, ensuring that growth in the e-commerce sector does not come at the expense of small retailers. He stressed the importance of a balanced approach to e-commerce regulation, aimed at safeguarding both consumer interests and the livelihoods of small businesses.

The government’s renewed focus on the e-commerce sector comes amid ongoing debates about foreign investment in retail and the political significance of small traders and retailers. As India continues to navigate the complexities of digital commerce, Goyal’s remarks underscore the need for a careful and considered approach to managing the sector’s expansion.

Sources By Agencies

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