WEF India Economic Summit 2019: Piyush Goyal Says Foreign Firms Shouldn’t Use E-Commerce For Predatory Pricing
The government is very clear not letting businesses of small retailers die, says Goyal.
Commerce and Industry Minister Piyush Goyal said foreign firms in the e-commerce sector should not use the platform for indulging in predatory pricing and getting into deep discounting to force small retailers out of business.
Goyal said the e-commerce platform is not expected to become a platform either for predatory pricing or to use muscle power of large capital at low volumes available which allows companies to source cheap, get economies of scale in sourcing and maybe offer discounts which in some sense throw out small retail out of business.
These remarks assume significance as concerns were raised by the government and small traders over circumventing norms related to foreign direct investment in e-commerce by certain retail companies.
Goyal said that he held a series of meetings with both Indian and foreign players, including from the U.S., in the e-commerce sector to understand their issues.
He said that there has been absolutely no change in India's stance as far as e-commerce is concerned and in fact, India provides a very stable and predictable regulatory framework.
“India is very clear, considering our domestic political compulsions and having about 120-130 million people dependent on small retail which is about 50-60 million small retail shops through the length and breadth of the country providing employment, which means effectively addressing the lives of nearly half the population of the country. This small retail is a very sensitive subject,” he said, speaking at the India Economic Forum.
He said that his party Bhartiya Janata Party is very clear that it cannot let small retail die and therefore it has restricted foreign direct investment in the multi-brand retail sector at 49 percent.
E-commerce is expected to be an agnostic platform. It’s a platform for trading and a platform which provides opportunities to buyers and sellers in an agnostic fashion to work together.Piyush Goyal, Commerce and Industry Minister
Goyal added that in that spirit, the government welcomes all e-commerce companies to India to work as an agnostic platform for people to trade-in.
U.S. Secretary of Commerce, Wilbur Ross said they understand the political sensitivity of small retailers, farmers and other groups.
E-commerce tends to result in lower costs of the retail product to the consumer and in a country which has relatively low consumer incomes such as India, that’s the flipside to the degree that there is a structural issue which forces the Indian consumer to pay more.Wilbur Ross, U.S. Secretary of Commerce
Ross said Amazon in India is spending one-third of what it spent in the year before in capital expenditure, quoting media reports.
Amazon and other e-commerce companies reached its current level due to their efficient and effective business practices and not through any “any evil mechanism”, Ross said.