NEW DELHI, Aug 21: Noting that e-commerce is eating into small retailers’ market share and margins, Union Commerce and Industry Minister Piyush Goyal on Wednesday suggested that the massive e-commerce growth could cause huge social disruption.
Speaking at the launch of a report titled ‘Net Impact of E-commerce on Employment and Consumer Welfare in India’, the Minister underlined some of the consequences arising from exponential e-commerce growth.
“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 could possibly become a part of the e-commerce network 10 years from now. This is a matter of concern,” Goyal said.
He, however, added that e-commerce is going to stay here, and he doesn’t wish it away.
“I am being contrarian to the perception sought to be made because we have seen this happen in the West. I dare say Europe, America have all seen the consequences of this. What has happened to the corner store, the mom-and-pop stores there? How many of them do you see surviving?” he asked.
He further asked, “Why did Switzerland not allow e-commerce to come in until very recently?”
While underscoring that e-commerce has a role to play in the growth of the country, he said that one has to think carefully and cautiously as to what that role is and how that role can be played in a more organised fashion.
Goyal said that e-commerce doesn’t attack every part of a retail store but is eating into the small retailers’ high-value, high margin products, which are the only products through which the store owner makes nominal profits and survives.
The Minister also brought up the issue of predatory pricing that e-commerce companies resort to.
“Is a predatory pricing policy good for the country? When Amazon says that we are going to invest a billion dollars in India we all celebrate. We forget the underlying story that that billion dollar is not coming in for any great service or any great investment to support the Indian economy. They made a billion dollar loss in their balance sheet in that year. They have to fill in the loss. And how did that loss get caused? They paid a thousand crore to professionals. I don’t know who these professionals are. I am myself a chartered accountant. I have done law. But I love to know which chartered accountants, professionals, and lawyers get a thousand crores unless you are paying all the top lawyers to block them so that no body fights a case against you,” the minister remarked.
He further elaborated, “If you make Rs 6,000 crore loss in one year, doesn’t that smell of predatory pricing to any of you? They are after all a e-commerce platform. They are not allowed to do B2C. The e-commerce firm legally cannot do business to consumers. They create entities where Indians contribute to making those entities sadly. Then they are caught, so they start closing down those entities. That is part two of the story. But they only reroute all the business through an entity to show that it is business to business, but in reality, all of you buy on those platforms. Don’t you? How do you buy? B2C is not allowed on these platforms. How are they doing it? Should not this be a matter of concern for all of us?”
(UNI)
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