Lakhs out of business due to e-commerce despite 1.6% of total retail sale on Flipkart, Amazon: CAIT

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December 18, 2019 5:14 PM

Despite e-commerce playing a miniscule part in India’s retail sales, lakhs of retailers are out of business, a trade body said on Wednesday.

CAIT, Piyush Goyal, e-commerce, Foreign Direct Investment, FDI norms, MSME, make in india program, Retail Regulatory AuthorityCAIT had earier also criticised the Ministry of MSME’s reported move to join hands with some prominent e-commerce companies for onboarding of small retailers on their platforms.

Despite e-commerce playing a miniscule part in India’s retail sales, lakhs of retailers are out of business, a trade body said on Wednesday. Within a day after a World Bank report said that online sales on platforms such as Flipkart and Amazon amount to only 1.6% of total retail transactions, seven crore members-strong CAIT said that “if only 1.6% of e-commerce sales has potentially destroyed the existing ecosystem of Indian retail… then the future seems extremely bleak and grave for India’s small retailers. The trade body also said that in just the last 12 months, more than 50,000 mobile retailers, 30,000 electronics retailers, about 25,000 kirana and 35,000 garment retailers have closed their business owing to violations from e-commerce platforms in FDI policy.

The body also alleged that these e-tailers indulged in inventory control, predatory pricing, preferential seller treatment, illegal exclusivity among other violations. Talking about Amazon and Flipkart, Praveen Khandelwal, National Secretary General said: “They have consumed most of the FDI for funding the losses on account of deep discounting. So if such companies are allowed to grow in the same manner, we can very well foresee what a precarious future is in store for India”. CAIT and e-tailers have been in a tiff for over a year now. 

However, according to the World Bank report, countries in South Asia, including India, need to focus on the flourishing of e-commerce as the same will give a boost to the economy. “E-commerce can boost a range of economic indicators across South Asia, from entrepreneurship and job growth to higher GDP rates and overall productivity,” Sanjay Kathuria, World Bank Lead Economist and co-author of the report, said earlier this week. While China’s online trade amounts to total 15% of retail trade in the country, India does not even match the global average of 14% and lags behind. 

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