India’s e-commerce growth a matter of concern, not pride: Piyush Goyal

India’s e-commerce growth is a “matter of concern” and not a “matter of pride”, Union Minister of Commerce Piyush Goyal said on Wednesday at the launch of a report on the ‘Net Impact Of E-Commerce On Employment And Consumer Welfare In India’.

“Are we going to cause huge, social disruption with this massive growth of e-commerce? I do not 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 said.

AMAZON DRAWS IRE

The minister was particularly critical of Amazon’s business practices. According to him, the company’s investments in India, worth billions of dollars, were about making up for losses rather than adding to the economic growth of the country.

“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,” he said.

Goyal said such losses could be an outcome of predatory pricing tactics, whereby big companies like Amazon drastically reduced prices in a bid to drive competitors out of business.

“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 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 said.

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.

SMALL RETAILERS SUFFER

Beyond Amazon, Goyal analysed the overall effect of the e-commerce culture on retail in India. The minister that said e-commerce was surging at an annual rate of 27 per cent and this could disrupt retail — more so, 100 million-odd small retailers who are crucial to the nation’s economy.

“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 retail sell mobile phones and their accessories?” he asked, adding: “E-commerce is eating into the small retailers’ high value, high margin products that are the only products by which they survive.”

The minister said while e-commerce was here to stay, it was essential to understand the after-effects. “E-commerce has a role, but we have to think carefully about what that role is and how it can be more organized,” he observed.