NEW DELHI — Union Commerce Minister Piyush Goyal on Wednesday raised concerns over the rapid expansion of e-commerce firms in the country that is leading to predatory pricing that has the potential to cause long-term damage to small retailers and the broader market.
The minister was speaking at an event to launch a report on 'Net Impact of E-Commerce on Employment and Consumer Welfare in India'.
"When Amazon says we are going to invest a billion dollars in India and we all celebrate, we forget the underlying story that this billion dollars is not coming for any great service or investment to support the Indian economy. They made a billion-dollar loss in their balance sheet that year, and they had to fill in that loss," the minister pointed out.
"If you make INR 6,000 crore loss in one year, does that not smell like predatory pricing to any of you?" he remarked.
He highlighted that these losses were the fallout of predatory pricing that had the potential to drive small retailers out of business.
He also pointed out that while e-commerce is growing at a rapid pace, with a 27 per cent annual growth rate, this expansion could lead to significant social disruption, particularly for the 100 million small retailers who form the backbone of India's economy.
"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,” the minister said.
He also clarified that he was “not wishing away the e-commerce industry, it is here to stay" but the role of this industry needs to be shaped up in an orderly fashion.
“The question is whether a predatory pricing policy is good for the country?" he remarked.
The Union Minister also underlined the need for a closer look at the issue of some e-commerce platforms engaging in direct sales to consumer sales, despite regulatory restrictions on B2C transactions.