“I don’t see it as a source of pride, but rather a source of concern,” Goyal said.
He was launching a report, ‘Net Impact of E-Commerce on Employment and Consumer Welfare in India’, by research think tank Pahle India Foundation.
The minister raised the possibility of half of India’s market coming online in the next decade, which is “a cause for concern”. The minister said Europe and the US have seen the consequences of uncontrolled growth in e-commerce. “What has happened to mom-and-pop stores there? How many do you think will survive?”
“I’m not looking forward to e-commerce going away; it’s here to stay,” he said, though he questioned the business model that has been hurting small retailers.
Goyal noted that smaller players in the ecosystem are being compromised and asked: “How many mobile phone stores do you see on the corner now? And how many were there 10 years ago? Where are those mobile phone stores? Will only Apple or the big retail chains sell mobile phones and their accessories?”
He also said that there was no longer any recourse.
Interestingly, the report Goyal launched argued that the growth of e-commerce has not come at the expense of traditional retail.
The minister, who has called the report’s employment estimates “lies, damned lies and statistics”, said he did not agree with its conclusions. “I would like to completely dissociate myself from this report,” he said. “I do not agree with any of its conclusions… I think that in their eagerness to prove that this has had no impact on employment in India, the researchers have lost sight of even the statistics that EY has published.”
Regulatory Affairs
“When Amazon says it’s going to invest $1 billion in the country, we celebrate and forget the underlying story – that that $1 billion is not going to go into great service or investment to support the Indian economy. They had a $1 billion loss on their balance sheet that year and they had to make up for that loss,” he said.
“And how did that loss come about? They paid Rs 1,000 crore to professionals. I don’t know who those professionals are… I would love to know which accountants, professionals or chartered lawyers are getting Rs 1,000 crore. Unless you pay all the best lawyers to block them so that no one can file a case against you,” Goyal said.
Goyal had said Amazon was also not doing India any favours in 2020, a day after then-CEO Jeff Bezos pledged to invest an additional $1 billion, underscoring the government’s hostility towards e-commerce marketplaces that allegedly flout rules.
The foreign direct investment (FDI) policy states that foreign-owned e-commerce platforms cannot do B2C (business-to-consumer) business. However, these companies are just rerouting all business through one entity to prove that they are B2B, Goyal said. “How are they doing it? Shouldn’t this be a matter of concern for us?” he said. “They create entities… When they are found out, they start shutting them down.”
The minister said the e-commerce sector has a role to play, but that it needs to be thought through very carefully and cautiously as to what that role is. “How can that role be played in an organised way? Is predatory pricing good for the country?”
Concerns about physical premises
Goyal said e-commerce companies are gobbling up high-value, high-margin products from small retailers, which are the only items mom-and-pop shops survive on. The impact of cloud kitchens on restaurants should also be seen, he said.
Commenting on online pharmacies, he said, “We have to assess what is happening with five lakh (offline) pharmacies in the country.”
He also expressed concern that consumers are increasingly choosing to shop online. “We will end up becoming a country of couch potatoes, watching OTT and eating at home every day,” he said.
“Of course, I don’t deny that technology will play its role. Technology is a means to empower, to innovate, to meet consumer needs, probably sometimes more efficiently. But we will have to see it grow in an orderly manner,” Goyal said.
India is not a developed nation like the US or Switzerland, with high per capita income, he said, adding that a large section of people here need affirmative action and help.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.