Large online retail companies may be engaging in predatory pricing, which is not good for the country with its estimated 100 million small retailers in both cities and rural areas who need to be protected from disruptions, Commerce and Industry Minister Piyush Goyal has said.
Referring to e-commerce giant Amazon’s ₹6,000 crore losses in India, Goyal hinted at the likelihood of predatory pricing.
“If you made ₹6,000 crore loss in one year, does that not smell of predatory pricing to any of you? Where did that loss come from?” the Minister said during the launch of a report, ‘Net Impact of E-Commerce on Employment and Consumer Welfare in India’, compiled by Pahle India Foundation.
The role of e-commerce in the Indian economy needs to be carefully evaluated and made citizen-centric to ensure there is no social disruption that may affect about 100 million small retailers across the country, the Minister said.
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A national e-commerce policy, with proposals to boost digital infrastructure and e-commerce exports as well as address regulatory issues such as predatory pricing, is “almost ready” and awaiting nod at the “highest level”, an official told businessline. The government has been working on the policy since 2018, with the first draft shared in 2019, but no decision has yet been taken on it due to multiple interest groups towing different lines.
“I don’t deny e-commerce has a role. But we have to think cautiously and carefully what that role is? How that role can be in a more organised fashion. Is predatory pricing good for the country?” Goyal said.
The Minister said that when large online retail companies announce big investments in the country, it is mostly to account for the huge losses they make. “When Amazon says it’s going to invest a billion dollars in the country, we forget the underlying story that the billion dollars is not coming in for any great service or any great investment to support the Indian economy. They made a billion dollars loss in their balance sheet and they have to fill in that loss,” he said.
Circumventing B2B rules
He further pointed out that such e-commerce platforms are not allowed to legally engage in business-to-consumer transactions but they try to get around the restrictions.
“The e-commerce platforms, legally, cannot do business-to-consumer. They create entities where Indians contribute to making these entities, sadly. Then they get caught so they start closing those entities, that’s part two of the story. But they only re-route all the business through an entity to show that it is B2B, but reality is all of you buy from these platforms. How do you buy? B2C is not allowed, how are they doing it? Should this not be a matter of concern for all of us?” said Goyal
The Minister raised the possibility that half of India’s market could become part of the e-commerce network in the next decade, which was a “matter of concern.”
On the broader implications of e-commerce, Goyal proposed a dispassionate and data-driven analysis of its impact. Drawing comparisons with Western countries, he noted the decline of traditional “mom and pop” stores in countries like the US and Europe due to the rise of e-commerce. He pointed out that Switzerland has a cautious approach to e-commerce.
The Minister expressed concern over the impact of e-commerce on local businesses and employment, particularly in sectors like pharmacies and mobile phone repair shops.