Government flags competition concerns amid rapid trade growth: sources

The rapid growth of fast-paced marketplaces like Blinkit, Zepto, and Swiggy Instamart has raised serious competition concerns with the Ministry of Consumer Affairs. Sources at CNBC TV18 say the Ministry of Consumer Affairs is reportedly concerned about the potential impact these platforms could have on small businesses and local kirana stores, which are key to neighbourhood trade in India.

According to sources, the Ministry of Consumer Affairs has raised these concerns with the Ministry of Corporate Affairs (MCA), highlighting fears that aggressive discounting and the proliferation of “dark stores” run by these fast-trading platforms could disrupt the competitive balance. The ministry fears that these practices could create an unlevel playing field, threatening the survival of smaller retailers who struggle to compete with the financial and logistical advantages of these technology-based companies.

The MCA reportedly took a different stance, suggesting that these fast-trading players are not yet significant enough to be regulated at least under the digital competition law and that the issue needs to be addressed by the consumer affairs ministry. “Unlike other countries, in India, competition and consumer protection do not come under the same ministry,” said a senior government official.

Earlier this week, Union Commerce Minister Piyush Goyal described the rapid growth of e-commerce companies as a “matter of concern” rather than an achievement. Speaking at the launch of a report on “Net Impact of E-Commerce on Employment and Consumer Welfare in India”, Goyal questioned the potential social disruption that could result from the growth.

“Are we going to create a huge social upheaval with this huge growth in e-commerce? I don’t think it’s something to be proud of that half of our market could be part of e-commerce in 10 years; it’s something to be concerned about,” Goyal noted.