Union Commerce Minister Piyush Goyal has raised significant concerns about the rapid growth of e-commerce in India, suggesting that the sector's expansion may lead to substantial social disruptions. Speaking at an event on Wednesday, which featured the release of a report titled *Net Impact of E-Commerce on Employment and Consumer Welfare in India*, Goyal emphasized that while e-commerce has an established role in the economy, its development should be managed carefully to avoid adverse effects.
Goyal questioned whether the massive growth of e-commerce could lead to social issues, stating, “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.” He stressed the need for a well-considered approach to integrating e-commerce into the Indian economy, acknowledging its benefits while cautioning against potential negative impacts.
A key concern raised by Goyal was the issue of predatory pricing practices employed by some e-commerce firms. He queried, "Is predatory pricing policy good for the country?" and noted that these practices could adversely affect small retailers who depend on high-margin products. Goyal warned that the aggressive pricing strategies used by e-commerce platforms might drive small businesses out of the market, posing a threat to their survival.
Goyal also expressed skepticism about the purported benefits of large investments by e-commerce giants such as Amazon. He questioned the true impact of Amazon’s announcement of a billion-dollar investment in India, suggesting that such investments might not be as beneficial to the Indian economy as they are portrayed. "When Amazon says we are going to invest a billion dollars in India and we celebrate, we forget the underlying story that this billion dollars is not coming for any great service or investment to support the Indian economy," he said.
Highlighting the issue further, Goyal pointed out that Amazon reported a billion-dollar loss that year, which he suggested could be linked to predatory pricing practices. He questioned the sustainability of business models that incur significant losses, asking, "If you make Rs 6,000 crore loss a year, doesn’t it sound like predatory pricing to you?"
In addition to concerns about pricing strategies, Goyal lamented the decline of small mobile stores, which have been overshadowed by larger retailers. He noted, "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?" This observation underscores the challenges faced by small retailers as they struggle to compete with larger, more resourceful players in the e-commerce sector.
Overall, Goyal’s remarks reflect a cautious stance toward the e-commerce sector’s growth, emphasizing the need for regulatory oversight and thoughtful management to mitigate potential negative impacts on small businesses and the broader economy.
