Not against e-commerce, clarifies Goyal, in damage control mode

New Delhi: In a swift damage control move, Union commerce minister Piyush Goyal on Thursday clarified his criticism of e-commerce, stating that he is not against the sector but rather supports it and favours Foreign Direct Investment (FDI) in it.

Goyal's remarks made a day earliers had sparked concern among e-commerce industry stakeholders, prompting the minister to issue a clarification.

"I am not against e-commerce, but I am for fair trade and ensuring that e-commerce platforms are not used to harm small retailers and domestic industries," Goyal said.

Govt supports FDI

The minister emphasized that his government supports FDI in the e-commerce sector and wants to ensure that online trade is conducted in a way that benefits all stakeholders, including small retailers and domestic players.

“We are very clear that we want to invite FDI, technology, and we want the best of the world. We are not against online platforms at all," Goyal said in a video message shared in the official WhatsApp group of the commerce ministry on Thursday.

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“We want to invite online platforms to come here and serve all of you. Online commerce, including e-commerce, offers tremendous benefits," he said.

"It offers the benefit of convenience, the benefit of speed, and the comfort of accessing services from your homes," he said. "What the government and the country seek is fairness—honesty towards the customer, honesty towards suppliers of goods and services, and ensuring that others (offline retailers) also have a fair chance to compete with online businesses."

Relief to e-commerce sector

Goyal's clarification comes as a relief to the e-commerce industry, which had expressed concern over the minister's earlier comments. The sector has been growing rapidly in India, with major players like Amazon, Flipkart, and others investing heavily in the country.

The government's support for FDI in e-commerce is expected to further boost the sector's growth and create more opportunities for businesses and consumers.

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Reacting to the minister’s comments, Vinod Kumar, President, Forum for Internet Retailers, Sellers & Traders, India (FIRST India), said, “SMEs are able to make entire India and the world as a customer base leveraging e-commerce platforms without having to invest in distribution channels. Our members have benefited immensely from e-commerce and digital commerce.”

Helping formal economy

"The growth of e-commerce is in fact helping growth of formal economy in the country. Without Amazon, Flipkart, Zomato or Swiggy, many of member would have struggled to do business, leave alone grow it. The Digital Bharat vision of PM is realised by e-commerce,” Kumar said.

Coming in support of e-commerce players, Shriram Subramanian, Founder & MD, InGovern Research Services, said, “The e-commerce platforms have been the bedrock for growth of small and medium businesses.”

“The numbers suggest that Amazon and Flipkart have done far more for Indian businesses than anyone else. In my view, it is incorrect to pull down e-commerce in India and suggest retail as the right model for consumers here,” Subramanian said.

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While speaking at the launch of a report, titled ‘Assessing the Net Impact of e-Commerce on Employment and Consumer Welfare in India’, Goyal on Wednesday said that e-commerce platforms should not be allowed to disrupt the 100 million of brick-and-mortars stores and small retailers in India.

The report was published by the Pahle India Foundation, a Delhi-based policy research institute founded by former Niti Aayog vice-chairman Rajiv Kumar.

"When Amazon says ‘we are going to invest a billion dollars in India’ and we all celebrate, we forget the underlying story that these billion dollars are not coming for any great service or investment to support the Indian economy," Goyal had said.

Giving the example of western countries, Goyal had noted the decline of traditional corner shops – or ‘mom and pop’ stores – in the US and Europe due to the rise of e-commerce.

"I’m not wishing away e-commerce. It's here to stay," Goyal had said, "but we must think carefully and cautiously about its role. Is predatory pricing good for the country?”

Ahead of policy shift

Goyal's remarks had come in the middle a government exercise to draft a comprehensive e-commerce policy that would check unethical trading practices. The policy is under evaluation at the top level of the government.

The minister had termed the report's projection of a massive 27% annual growth in the e-commerce market as "lies, damn lies, and statistics" – a phrase often attributed to the 19th century American writer Mark Twain.

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"It's not a matter of pride that half of our market could possibly become part of e-commerce in the next 10 years; it's a matter of concern. There are lies, damn lies, and statistics," the minister had said.

"From the country’s perspective, based on the little I’ve read and seen of this report, I would like to completely disassociate myself from it. I do not agree with any of these findings."

As per the report, the share of e-commerce in retail sales was 4.7% in 2019 and it grew to 7.8% in 2022. The report also stated that e-commerce is growing at 27% annually.