Transformative impact of e-commerce on Indian economy, jobs & consumer welfare
E-commerce is resulting in a transformative impact on the Indian Economy, according to a landmark report released by the Pahle India Foundation (PIF), launched by Union Minister for Commerce & Industry, Piyush Goyal. According to Rajiv Kumar, Chairman of PIF and former Vice Chairman of Niti Aayog, “E-commerce has revolutionized India’s retail landscape. Our study provides a data-driven understanding of its impact on employment and consumer welfare, offering invaluable insights for policymakers and industry stakeholders”.
The study was conducted across 35 cities in 21 states and union territories covering 12,000 participants-8,209 online consumers, 2031 offline sellers and 2002 online sellers. The study also analyzed the broader impact of e-commerce on consumer welfare, focusing on 6 parameters: convenience, competition, consumer confidence, access and inclusion, cost effectiveness and grievance redressal. Convenience emerged as the most effective parameter of consumer welfare, enabling consumers to surf various options, prices and decide from the comfort of their homes. Altogether, it allows greater and more transparent competition, removing information asymmetry, providing more choices and increased consumer confidence.
In terms of employment, e-commerce generates over 16 million jobs, in marketing, management, customer service, warehouse logistics and delivery. These are growing, and across the country, including rural, hilly and remote areas. It also transpired that e-commerce vendors employ 54% more people and twice as many women as compared to offline vendors.
Of late, there has been considerable media reporting, though unconfirmed and based on leakages, on the investigation by Competition Commission of India (CCI) regarding Flipkart, Amazon and the broader e-commerce sector. When examining them, it is important to balance concerns over CCI’s regulatory compliance with the role e-commerce plays in India’s economic growth, job creation and broader consumer welfare.
According to the Preamble of the Indian Competition Act, this is an Act ‘to keep in view of the economic development of the country…to protect the interests of the consumers…’.
Some of the factor to be kept in view :-
1. Economic Growth: E-commerce platforms like Flipkart, India’s largest home-grown platform, have become critical in expanding India’s digital economy, providing a marketplace for millions of products and businesses, including MSMEs. The sector contributes significantly to India’s GDP, provides necessary linkages and helps shift toward a digital economy.
2. Employment Generation: E-commerce generates enormous employment, both directly and indirectly. From delivery personnel to warehouse management and customer service, millions of jobs are created across the supply chain. Additionally, the platform enables small businesses and startups to access a wider customer base, within and outside India, creating entrepreneurial and market opportunities.
3. Skill Development: E-commerce has boosted demand for new skills, such as expertise in digital marketing, data analytics and emerging technologies like Artificial Intelligence (AI), Block Chain, Augmented Reality (AR) etc. This has resulted in growth of educational and training programs for relevant skills in the digital economy.
4. Boost to Exports: These platforms have started supporting Indian manufacturers, artisans, and small enterprises by providing them with access to global markets. This has helped improve the export of local-made goods, supporting the ‘Make in India’ initiative and enhancing foreign exchange earnings.
5. Boost to Gig Economy: E-commerce platforms usually depend on gig workers for delivery and services, in warehousing and storage, which all creates enormous job openings.
6. Support for Women Entrepreneurs and Crafts: E-commerce has been instrumental in empowering women artisans and entrepreneurs, especially those in rural areas. These provide a direct link between women who produce crafts, textiles, and handmade goods, and the end consumer, cutting out middlemen and increasing profit margins. This helps not just economic independence but also the preservation of traditional crafts and skills.
7. Entrepreneurial Support: Support for MSMEs, women, craftsmen and artisans in providing access to online marketplaces, including food and agro-processing, funding opportunities, foster innovation and growth.
8. Inclusive Growth: By enabling access to goods and services in remote area, e-commerce platforms help bridge the urban-rural divide. This democratization of access supports more inclusive growth across regions.
9. Competitive Pricing: Online competition and transparency in pricing also results in greater competition and lower prices across the retail sector.
As CCI looks into issues such as competition, pricing practices and market dominance, it’s crucial that the policy framework supports the growth of this sector while ensuring fair play. Balancing regulatory scrutiny with a recognition of the critical benefits that e-commerce brings to India’s economic fabric is essential. On the other hand, there is no doubt that it would be crucial to provide support to trading community, kirana merchants, small shopkeepers with access to digitization and technology, linkage with e-commerce platform of their choice, including ONDC, and ensure upgradation of their skills with modern tools such as AI, AR etc. In the present era, digital inclusion will be crucial to ensure that the benefits of e-commerce reach all. For this, it would be crucial to have meaningful and dynamic collaboration among industry, government and educational institutions to maximize the positive impact on the economy, creation of jobs and consumer welfare.