The fast-moving consumer goods (FMCG) distributors’ association has written to the Ministry of Commerce and Industry regarding the rapid growth of the quick commerce industry, which is hurting the traditional retail trade.
In its email sent on Thursday to the government, the All India Consumer Products Distributors Federation highlighted the significant challenges posed by the rapid growth of quick commerce platforms such as Blinkit, Zepto, and Instamart to the traditional retail sector and the FMCG distribution network in the country.
The letter stated, “While we acknowledge the role of innovation and technology in shaping the future of commerce, the unchecked expansion of these quick commerce platforms is leading to severe disruptions in the retail ecosystem.”
The association also expressed serious concerns regarding the compliance of these platforms with India’s Foreign Direct Investment (FDI) regulations.
“The FDI rules clearly prohibit e-commerce entities operating under the marketplace model from holding inventory or exercising control over inventory sold on their platforms. However, it appears that these quick commerce platforms may be engaging in practices that blur the lines between a marketplace and an inventory-based model, potentially violating FDI norms,” the letter stated.
It further noted that this situation is not only creating an uneven playing field but is also threatening the livelihoods of millions of small retailers and distributors who have been the backbone of India’s retail sector for decades.
The association urged the government to initiate a thorough investigation into the operational models of these quick commerce platforms to ensure compliance with FDI norms, implement protective measures for small retailers and traditional distributors to safeguard their interests, and prevent monopolistic practices. It also called for facilitating a dialogue between all stakeholders from the retail sector, FMCG companies, and quick commerce platforms to establish fair and equitable business practices.
This move by the association comes after Union Commerce and Industry Minister Piyush Goyal earlier this week expressed concerns over the surge in e-commerce business in the country and questioned whether predatory pricing policies are beneficial for the nation. However, he later clarified that the government has no intention of stopping online commerce and that the idea is for small retailers to coexist with online services.
“We are very clear that we want to invite FDI, we want to invite technology, and we want to have the best of the world. We are not against online commerce at all. Online e-commerce offers tremendous benefits, such as convenience and speed,” Goyal said, adding, “What the government and the country desire is fair play, honesty for the customer, and honesty to the supplier, to ensure that our people have a fair chance to compete against such online businesses.”
First Published: Aug 23 2024 | 7:20 PM IST