Commerce and Industry Minister Raised Concern Over Adverse Impact of e-Commerce on Economy in Long-Term

Posted 22 Aug 2024

2 min read

The concern was raised while launching a report ‘Net Impact of E-Commerce on Employment and Consumer Welfare in India’ which shows positive impact of e-commerce on Indian economy (refer to the box).

"e-commerce" means buying or selling of goods or services including digital products over digital or electronic network.

Adverse Impact of e-commerce

Predatory pricing: e-commerce platforms can offer deep discount to get rid of competitors and take over the market.
- When competition is reduced consumer may lose the benefit of cost effectiveness of e-commerce platform.
Reduced options for consumers: Fewer local shops may lead to higher travel costs or fewer shopping choices if they avoid online shopping.
Loss of employment: Due to less competition and impediment of traditional retail sector.
Privacy issue: Abuse of consumer data and consumer privacy.
Breach of law: For example, currently some e-commerce platforms (like amazon) in India are engaged in direct sales to consumer sales, despite regulatory restrictions on B2C transactions.

Regulations of E-commerce in India

Consumer Protection (E-Commerce) Rules, 2020
Consumer Protection Act 2019

Positive impact of e-Commerce

According to the report released recently:

e-commerce, comprising 7.8% of total retail sales in 2022 is growing at a CAGR of 27% between 2018 and 2030.
It does not have any negative impact on traditional retail, results in Consumer welfare gain (due to convenience, cost effectiveness, etc.)
It has also increased employment particularly for women.