FDI curbs on ecommerce: From best deal to raw deal
By
Prof. Bejon Kumar Misra, Founder,
Consumer Online Foundation, New Delhi, INDIA.
It is most unfortunate that Consumer Organisations are always ignored while framing
key policy decisions. The case in hand is on e-commerce, as Consumers, the key
stakeholders in retail, are never part of any consultations to ensure a robust, inclusive
policy framework that protects the consumer’s interests.
The sheer array of choices, coupled with better prices and an effortless buying
experience offered by ecommerce players have made the Indian consumer feel truly
like a king over the past few years.
Now, if there was a new policy that would not allow the supermarket to offer choice,
accessibility and affordability, then these would naturally deny the rights of the
consumer to choice, quality, standards, accessibility, safety and redressal. This is
exactly what is happening in India’s ecommerce space, with the central government
implementing a new FDI policy that among other challenges, artificially limits the growth
of Indian manufacturers and dealers working on e-commerce platforms to provide the
consumers quality products in a competitive manner – potentially bringing an end to an
era of great competition, choice and accessibility to quality products through best deals
for consumers. As I always said, “Competition with a robust regulatory oversight is the
best friend of the consumer”.
Core concern
Even as the Indian ecommerce industry is on course for a five-fold increase from USD
40-bn today to USD 200-bn by 2025, at the core of the big retail success story is the
Indian consumer. Equipped with increasing affluence and armed with improving
technologies, the Indian consumer’s conscious shifts and changing preferences are the
key drivers of the country’s organized retail sector. To have a government policy that
now strikes at the very core of the consumer’s choices, one would have expected the
government to hold consultations with the consumer as a key stakeholder in the retail
chain before framing a major policy that significantly impacts consumer rights.
Policy matters
On December 26, the Department of Industrial Policy and Promotion (DIPP) announced
broad new restrictions on India’s fast-growing ecommerce sector, a sector that is
estimated to contribute a good four per cent to the country’s economy. The government
adopted certain new found restrictions, Albeit to protect domestic interests in an
overenthusiastic manner, which has discouraged healthy competition. The major global
players, who popularized the very concept of ecommerce in India and empowered the
consumers in true sense for the first time in India, were taken by surprise and so are the
consumers. The restrictions imposed by the new policy will not only downgrade quality
and choice for the consumers but will also hurt hundreds of thousands of Indian
companies that sell on the ecommerce marketplaces.
Over the years, for better inventory management and faster delivery, several of these
ecommerce platforms have made huge investments in the interest of customer delight
to provide convenience with quality service. If we fail to take appropriate decisions the
consumers will again become victims of cartels and unfair trade practices. Is it fair to
suddenly change the script on INVEST INDIA, MAKE IN INDIA after the foreign players
have invested billions of dollars to improve India’s infrastructure, connect our small
businesses to the global marketplace, made our companies more competitive and
enabled consumers to access quality products at the most affordable prices. The
investments on online marketplaces, in use of technology for good manufacturing &
distribution practices, supply chain infrastructure that support them, provide Indian
consumers convenient, reliable, and fast access to hundreds of millions of products at
competitive prices have gone for a spin at the cost of our resources. With the new
policy, competition will be compromised, which eventually will deny the consumer the
choices and access to quality products. This protectionist policy while destroying the
B2B ecosystem will also pull down the very structure that ensured the best options to
the consumer and protected the consumer’s interests from all the dimensions of quality.
The way forward
DIPP seems to have issued the new policy without understanding the consequences as
it had a myopic view based on interventions made by certain business interest,
undermining the interest of the consumers and use of technology to assure quality,
safety and accessibility. The Government has unfortunately failed to notice the harms it
may cause to the country in terms of growth and development triggered by restrictions
on India’s online shoppers. Though the government is well-meaning in its intention,
hasty implementation of such a policy can have huge negative fallout for all
stakeholders, including the consumer. The government should always be a neutral and
unbiased policy makers and develop policies based on transparent consultations with all
the stakeholders including the Indian Consumer to encourage free and fair trade rather
than restrict investment in the ecommerce sector, which will generate employment for
our youths and potential human resource, which we have in abundance and consumers
who now have higher disposable income to have quality life-style in the most affordable
manner based on choice, standards and credible information with prompt redressal
mechanism.
An immediate measure would be to push forward the date of implementation and take
measures to accommodate the constraints and concerns of all stakeholders. Consulting
consumer bodies and organisations working to protect consumer’s interests would
ensure proper representation of the Indian consumer’s apprehensions and expectations
before the government, allowing it to take an informed approach to policy-making. A
well-thought, transparent methodology will not only ensure a fair, balanced and robust
policy framework for the booming retail sector, but also generate huge confidence
among millions of Indian consumers reassured by a responsive government, which the
world today recognizes and we are all proud to be part of the NEW INDIA.