E-commerce companies pose risks to livelihood of millions of people: Piyush Goyal

When large e-commerce companies talk about creating a million jobs or how they support small manufacturers, they forget to disclose the job losses that will take place because of their influence, commerce and industry minister Piyush Goyal said, pointing to alleged predatory practices of global e-tailers Amazon and Walmart-owned Flipkart in India.

“Today, it may not look threatening. One can say how these companies will impact the villages, how they will reach out everywhere? But the strength of money power, technology and their ability to sustain for a long period of time does pose risks to nearly a 100 million people who are engaged in one form or the other through the small retail stores across the country,” Goyal said at a webinar. “Therefore, when these large companies talk about providing a million jobs or giving support to maybe 100,000 Indian small manufacturers, I think they very conveniently forget to also say what will be the job losses because of their influence. So you can create a million jobs but if that’s going to be at the cost of 10 million other jobs, clearly it is to the detriment of India.”

Amazon has so far announced the creation of over 1 million jobs in India and plans to employ another 1 million by 2025. While Flipkart has not made any such announcements, it is estimated to have created 700,000 to 1 million direct and indirect jobs.

Amazon and Flipkart also add thousands of additional workers during the peak festival shopping season when they run e-commerce sales. According to reports, e-commerce and logistics companies in India cumulatively created over 300,000 jobs during Diwali last year, a majority of them in logistics functions, warehousing and customer service.

Goyal is known not to mince words, whether he speaks publicly or privately. However, this is perhaps the first time that he has criticised e-commerce companies so severely.

Last year, he said Amazon wasn’t doing India a favour by investing $1 billion. He questioned how the online marketplace could incur such big losses without indulging in predatory pricing.

Even in private meetings with the marketplaces, the minister has been known to ask them to follow the spirit of the rules instead of chasing lawyers to circumvent them further.

There are more than 60 million mom-and-pop stores across India, owned by people who also constitute a big chunk of the vote bank of the ruling Bharatiya Janata Party (BJP).

Offline traders have been crying foul, claiming that e-commerce companies including Amazon and Flipkart indulge in anti-competitive practices such as predatory pricing and massive discounting.

The government seems to be coming down heavily on the two e-tailers that are fighting a case against the Competition Commission of India in the Karnataka High Court. The judgment is expected this week and will determine whether the CCI can investigate alleged anti-competitive practices by the two companies.

While speaking at the webinar, Goyal also said that US-based e-commerce companies were violating Indian laws. However, he did not mention Amazon or Walmart-owned Flipkart.

While Amazon said it had no comments to offer, Flipkart did not respond to queries.

“He has very clearly outlined that the intention of the government is not to allow any e-commerce entity, whether it is foreign or indigenous, to flout the law anymore,” said Praveen Khandelwal, national secretary general of the Confederation of All India Traders.