PAPER III General Studies- II: Governance, Constitution, Polity, Social Justice and International relations PAPER-IV GS-III: Technology, Economic Development, Biodiversity, Environment, Security and Disaster Management

Appointment to various Constitutional posts; Constitutional Bodies (powers, functions and responsibilities); Statutory, Regulatory and Quasi-judicial bodies;

Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.

In News: Predatory Pricing: Are e-commerce firms playing fair?;

Commerce Minister blames e-tailers for predatory pricing, warns of social disruption

The e-commerce market in India has been experiencing rapid growth in recent years. What implication would it have on the Indian economy?

According to a report by Pahle India Foundation, India’s e-commerce industry is projected to grow at a compound annual growth rate of 27 per cent from 2018 to 2030.

Factors like increasing internet penetration, rising disposable incomes, and a growing middle class have fueled this expansion.

Benefits of growing e-commerce market:

1. Job creation: The expansion of e-commerce has led to a surge in demand for various roles, including logistics, warehousing, customer service, and technology

2. Boost to GDP: In its present state the contribution of e-commerce to GDP is around 0.2% which is expected to grow 15 times to around 2.5% by 2030.
3. Increased Consumer Choice: provided consumers with access to a wider range of products and services at competitive prices. 
4. Integration with such platforms benefits vendors in smaller cities. It provides a wider reach and reception across the global market, with minimum investments.
5. Helps businesses build more resilient supply chains by diversifying suppliers, implementing risk management strategies, and leveraging data analytics.
6. E-commerce streamlines the product distribution chain by connecting producers directly with consumers. This enables tailored products and services based on individual preferences, enhancing customer satisfaction.

While the e-commerce market in India has brought numerous benefits, it has also raised some concerns.

1. Anti competitive practices by dominant e-commerce platforms:

Allegations of deep discounting and the practice of preferred sellers leveled against e-commerce platforms.This could disadvantage the firm’s existing competitors and also dissuades prospective new entrants in the market segment therefore resulting in the creation of a monopoly-like market structure.

2. Manipulating consumers:

While consumers benefit in the short-term via lower prices, the long-term consequences are less market competition, less choice for buyers, and the possibility of the dominant firm later raising prices to the detriment of consumers. Also concerns such as product quality, delivery delays, and fraudulent practices have been contended.

3. Job Displacement: The rise of e-commerce has led to job losses in traditional retail sectors, such as brick-and-mortar stores. This can have a negative impact on local economies and employment rates.
4. Regulatory Challenges: The evolving regulatory landscape, including tax policies, data protection regulations, and consumer protection laws, can create uncertainty and compliance burdens for e-commerce businesses
5. Internet Penetration: Despite significant growth, internet penetration in rural areas remains low, limiting access to e-commerce platforms and online transactions.
6. Digital Literacy: A large portion of the population, especially in rural areas, lacks digital literacy skills, making it difficult to navigate e-commerce platforms and understand online transactions.
7. Environmental Impact: The increased demand for packaging materials and deliveries can contribute to environmental pollution and resource depletion.

Way ahead:

1. Fair Competition Policies: Implementing fair competition policies can prevent anti-competitive practices, such as predatory pricing and unfair market dominance, ensuring a level playing field for all players.
2. Support for Small Businesses: Government initiatives and e-commerce platforms can train offline vendors from smaller cities and 
3. Though the government built Open Network for Digital Commerce (ONDC)  to break the dominance of large e-commerce platforms and empower small businesses and consumers.major e-commerce players are yet to fully integrate their marketplaces into the ONDC network.Government should encourage businesses and consumers to adopt ONDC
4. Digital Divide: The digital divide, with varying levels of internet penetration and digital literacy across the country, can limit the reach of e-commerce and hinder consumer adoption.

Addressing these challenges is crucial for the sustainable growth of the e-commerce market in India. By investing in infrastructure and fostering a conducive regulatory environment, India can unlock the full potential of e-commerce and drive economic growth.

Source:

https://indianexpress.com/article/business/massive-growth-e-commerce-social-disruption-piyush-goyal-9525467/

https://www.financialexpress.com/business/industry-predatory-pricing-are-e-commerce-firms-playing-fair-3590117/

https://indianexpress.com/article/opinion/editorials/express-view-on-predatory-pricing-market-facts-spectres-9528220/