India’s Union Commerce Minister Piyush Goyal on Wednesday (August 21) raised concerns over the rapid expansion of e-commerce in the country, describing it as a “matter of concern” rather than an achievement.
Speaking at an event for the launch of a report on the ‘Net Impact of E-Commerce on Employment and Consumer Welfare in India,’ Goyal pointed out the potential social disruptions that could arise from the sector’s explosive growth.
Amazon’s billion dollar investment
Goyal also challenged the enthusiasm surrounding Amazon’s recent billion-dollar investment in India, urging stakeholders to consider the implications of such investments. “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.
The minister pointed out that Amazon reported a billion-dollar loss on their balance sheet that year, suggesting that such financial results could be a sign of predatory pricing practices. “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?” Goyal questioned.
Social disruption
“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,” Goyal said.
He spoke about the need for a thoughtful and measured approach to the sector’s expansion, according to a report by Economic Times.
Predatory pricing policy
Although he acknowledged the role of e-commerce in India, Goyal expressed apprehension about the pricing strategies employed by some e-commerce firms, questioning whether “predatory pricing policy” is beneficial for the country.
“E-commerce is eating into the small retailers’ high-value, high-margin products, which are the only products by which they survive,” Goyal remarked.
He noted that while e-commerce is a permanent fixture in the market, its impact on small retailers and the broader economy must be checked.
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Piyush Goyal is worried about Amazon’s $1 bn investment in India, here’s why
