Rapid E-com growth could hit millions of retail stores and jobs

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Last Updated23/08/2024

Union Minister of Commerce & Industry Piyush Goyal questioned Amazon’s announcement of $1 billion investment in India.

Commerce and Industry Minister Piyush Goyal recently raised significant concerns regarding the rapid growth of e-commerce in India, particularly focusing on the business and pricing strategies of major players like Amazon.
While acknowledging the inevitability of the presence of the e-commerce, Mr. Goyal emphasized the need for its growth to be "orderly" and "citizen-centric," highlighting potential risks to traditional retail and the broader economy.

A key issue raised by Mr. Goyal is the possibility of predatory pricing by e-commerce giants. He questioned whether Amazon’s $1 billion investment in India,which coincided with a similar amount in reported losses, might indicate pricing strategies designed to undermine competition.The concern is that such practices could drive small retailers—who are vital to India's retail ecosystem—out of business.

The Minister expressed apprehension about the long-term impact of e-commerce on India's approximately 100 million small retailers. He pointed out that in countries like the United States and those in Europe, the rise of e-commerce has led to the decline of traditional "Mom and Pop" stores..

Mr. Goyal has been vocal in his skepticism towards the conclusions of a report that suggested e-commerce growth does not pose a significant threat to employment opportunities in India.
He dismissed the report’s findings, suggesting that the data may have been selectively presented to downplay the negative effects of e-commerce on traditional retail jobs.
Furthermore, the Minister highlighted the government's regulatory concerns, specifically regarding the potential violation of foreign direct investment (FDI) norms by e-commerce companies.
He referred to instances where companies might be circumventing rules that prohibit them from holding their own inventory or engaging directly in B2C (business-to-consumer) transactions, which are supposed to be restricted under Press Note 3 of 2016.