Union Commerce Minister Piyush Goyal has raised significant concerns about the rapid expansion of e-commerce in India, questioning the broader implications for the economy and society.
Speaking at the release of a report on the 'Net Impact of E-Commerce on Employment and Consumer Welfare in India,' Goyal called attention to Amazon's business practices, particularly its billion-dollar investments, which he suggested are more about covering losses than contributing to India's economic growth.
"When Amazon says we are going to invest a billion dollars in India and we all celebrate, we forget the underlying story that this billion dollars is not coming for any great service or investment to support the Indian economy. They made a billion-dollar loss in their balance sheet that year, and they had to fill in that loss," Goyal said.
He linked these losses to predatory pricing, a practice where prices are set so low that it undercuts competitors, driving them out of the market. "If you make Rs 6,000 crore loss in one year, doesn't that not smell like predatory pricing to any of you?" he questioned, emphasizing the potential long-term damage to small retailers and the broader market.
Goyal's critique extended beyond Amazon. He questioned the overall impact of e-commerce on India's retail landscape. He pointed out that while e-commerce is growing at a rapid pace, with a 27 percent annual growth rate, this expansion could lead to significant social disruption, particularly for the 100 million small retailers who form the backbone of India's economy.
"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," Goyal warned.
The minister underscored the need for a balanced approach, where the benefits of e-commerce are weighed against the potential risks to traditional retail. He stressed that while e-commerce has its role, it should not come at the expense of small businesses, which are already struggling to compete. "E-commerce is eating into the small retailers' high-value, high-margin products, which are the only products by which they survive," Goyal noted, highlighting the threat to livelihoods across the country.
Goyal also addressed the broader market dynamics, questioning the legality and ethical implications of e-commerce platforms engaging in direct-to-consumer sales, which he suggested may be happening despite regulatory restrictions. "They are, after all, an e-commerce platform, and they are not legally allowed to do B2C. However, the reality is all of you buy on these platforms. How are they doing it? Should it not be a matter of concern for us?" he asked, urging a closer examination of these practices.