By Siddharth Pai
In India’s bustling economy, e-commerce has emerged not just as a convenience but as a cornerstone of the retail ecosystem, reflecting a profound shift in how trade and commerce are conducted in the world’s largest country by population. This country’s unique position, with its vast population, burgeoning middle class, and increasing internet penetration, offers an unparalleled opportunity for e-commerce growth. Fostering a competitive culture within this rapidly expanding digital market, however, while paramount, is no mean task.
The vectors for stifling competition in this new world are not the same as those that previous monopolistic and oligopolistic enterprises used to employ. In the non-digital world, these effects were often felt by the end consumer, who ended up paying extortionist prices for goods and services. When I was a youth, India, with its MRTP (Monopolistic and Restrictive Trade Practices) Act, policed these would-be monopolists and oligopolists. In addition, whatever was left of unnatural monopolies prior to the 1991 liberalisation disappeared in the wake of the newly opened-up country. Competition became the new norm. Indians could now buy anything at home that previously was available only in foreign countries and were not limited to home-grown firms that had enjoyed the ‘licence raj’.
Also Read Friends in need: India and South Korea are strengthening ties as geopolitical insecurity grows in the Indo-Pacific Bumps on the road: New BoT terms for highway construction may throw pvt investors into risk-aversion mode Ringside view by Tushar Bhaduri: Mumbai Indians captain Hardik Pandya getting booed at home shows IPL fans want their voice heard Agriculture in Viksit Bharat: In the vision of a developed India by 2047, agriculture must also catch up with the times These traditional anti-monopoly measures do not always apply neatly in the digital context. The lines between different markets are blurred, and services often come at zero initial monetary cost to the consumer. Recognising the importance of competition, the Indian government and regulatory bodies have been keen to frame laws and guidelines that ensure fair play. The Competition Act of 2002, and amended in 2007, were the initial cornerstone legislations aimed at preventing practices that have adverse effects on competition. They aimed to promote and sustain competition, protect the interests of consumers, and ensure freedom of trade in the markets of India.
In recent years, the spotlight has turned towards e-commerce due to its explosive growth and the unique challenges it presents in terms of competition. Predatory pricing, exclusive contracts, and platform neutrality are areas of concern that regulators are addressing. Existing law needs to be expanded.
The Competition Commission of India has already been actively scrutinising e-commerce platforms to ensure they do not abuse their dominant position and that smaller players have a fair shot at success. Allegations of Big Tech firms such as Amazon and Google engaging in anti-competitive practices, from prioritising their products in search results to exclusive selling arrangements, have raised concerns about stifled competition, hindered innovation, and compromised consumer choice. This is in line with what we have seen abroad, particularly in the European Union (EU), where regulators have been swift to act, and have punished Big Tech firms with large fines for a variety of transgressions. As I have argued before, the EU is a beacon for the rest of the world in the regulation of Big Tech firms, primarily because as a supra-national body, its regulators do not have the horizon problem of elections every few years, like its member nations do.
India’s proposed e-commerce policy is a testament to the government’s intent to create a balanced, competitive market. The Report of the Committee on Digital Competition Law (RCDCL) is a tour de force. This policy is expected to address key issues such as data localisation, consumer protection, and anti-counterfeiting measures. By setting a clear regulatory framework, the government aims to level the playing field for all participants.
One of the RCDCL’s objectives is to stymie unfair trade practices like deep discounting, which can distort the market. Such practices, while seemingly beneficial to consumers in the short term, can stifle competition by driving smaller players out of the market. In the long term, these practices will end up in a TINA (there is no alternative) situation, thereby allowing Big Tech firms who corner the market the licence to exploit consumers.
Fostering this competitive culture in India’s e-commerce markets is essential for ensuring that the benefits of this digital revolution are widely distributed. By encouraging competition, India can spur innovation, improve consumer choice, and drive economic growth. Existing and proposed laws play a crucial role in shaping a market that is fair, dynamic, and inclusive. As India continues to navigate the complexities of the digital age, the focus must remain on creating a regulatory environment that balances the interests of all stakeholders and paves the way for a vibrant and competitive e-commerce ecosystem.
Building a competitive culture in e-commerce also involves nurturing the broader ecosystem, where the government has been active. This includes allowing investment by private firms in digital infrastructure, such as high-speed internet access across the country, and promoting digital literacy among the population. The recent digital leap has enabled even the most remote areas to access goods and services previously out of reach, bridging the urban-rural divide and knitting the country closer together in a web of digital commerce. Encouragingly, the government is already fostering a start-up culture that encourages risk-taking and innovation. Support in the form of funding, mentorship, and access to resources helps budding entrepreneurs to bring their ideas to life and compete in the e-commerce arena.
At its core, competition is the crucible in which innovation is forged, and for consumers, it means more choices, better prices, and enhanced service quality. For the economy, it means increased efficiency and productivity, driving growth, and creating jobs. A competitive culture is not just about keeping prices low; it’s about pushing the boundaries of what’s possible. From drone deliveries to blockchain-based supply chains, the possibilities are limitless.
Siddharth Pai, Technology consultant and venture capitalist
By Siddharth Pai
In India’s bustling economy, e-commerce has emerged not just as a convenience but as a cornerstone of the retail ecosystem, reflecting a profound shift in how trade and commerce are conducted in the world’s largest country by population. This country’s unique position, with its vast population, burgeoning middle class, and increasing internet penetration, offers an unparalleled opportunity for e-commerce growth. Fostering a competitive culture within this rapidly expanding digital market, however, while paramount, is no mean task.
The vectors for stifling competition in this new world are not the same as those that previous monopolistic and oligopolistic enterprises used to employ. In the non-digital world, these effects were often felt by the end consumer, who ended up paying extortionist prices for goods and services. When I was a youth, India, with its MRTP (Monopolistic and Restrictive Trade Practices) Act, policed these would-be monopolists and oligopolists. In addition, whatever was left of unnatural monopolies prior to the 1991 liberalisation disappeared in the wake of the newly opened-up country. Competition became the new norm. Indians could now buy anything at home that previously was available only in foreign countries and were not limited to home-grown firms that had enjoyed the ‘licence raj’.
These traditional anti-monopoly measures do not always apply neatly in the digital context. The lines between different markets are blurred, and services often come at zero initial monetary cost to the consumer. Recognising the importance of competition, the Indian government and regulatory bodies have been keen to frame laws and guidelines that ensure fair play. The Competition Act of 2002, and amended in 2007, were the initial cornerstone legislations aimed at preventing practices that have adverse effects on competition. They aimed to promote and sustain competition, protect the interests of consumers, and ensure freedom of trade in the markets of India.
In recent years, the spotlight has turned towards e-commerce due to its explosive growth and the unique challenges it presents in terms of competition. Predatory pricing, exclusive contracts, and platform neutrality are areas of concern that regulators are addressing. Existing law needs to be expanded.
The Competition Commission of India has already been actively scrutinising e-commerce platforms to ensure they do not abuse their dominant position and that smaller players have a fair shot at success. Allegations of Big Tech firms such as Amazon and Google engaging in anti-competitive practices, from prioritising their products in search results to exclusive selling arrangements, have raised concerns about stifled competition, hindered innovation, and compromised consumer choice. This is in line with what we have seen abroad, particularly in the European Union (EU), where regulators have been swift to act, and have punished Big Tech firms with large fines for a variety of transgressions. As I have argued before, the EU is a beacon for the rest of the world in the regulation of Big Tech firms, primarily because as a supra-national body, its regulators do not have the horizon problem of elections every few years, like its member nations do.
India’s proposed e-commerce policy is a testament to the government’s intent to create a balanced, competitive market. The Report of the Committee on Digital Competition Law (RCDCL) is a tour de force. This policy is expected to address key issues such as data localisation, consumer protection, and anti-counterfeiting measures. By setting a clear regulatory framework, the government aims to level the playing field for all participants.
One of the RCDCL’s objectives is to stymie unfair trade practices like deep discounting, which can distort the market. Such practices, while seemingly beneficial to consumers in the short term, can stifle competition by driving smaller players out of the market. In the long term, these practices will end up in a TINA (there is no alternative) situation, thereby allowing Big Tech firms who corner the market the licence to exploit consumers.
Fostering this competitive culture in India’s e-commerce markets is essential for ensuring that the benefits of this digital revolution are widely distributed. By encouraging competition, India can spur innovation, improve consumer choice, and drive economic growth. Existing and proposed laws play a crucial role in shaping a market that is fair, dynamic, and inclusive. As India continues to navigate the complexities of the digital age, the focus must remain on creating a regulatory environment that balances the interests of all stakeholders and paves the way for a vibrant and competitive e-commerce ecosystem.
Building a competitive culture in e-commerce also involves nurturing the broader ecosystem, where the government has been active. This includes allowing investment by private firms in digital infrastructure, such as high-speed internet access across the country, and promoting digital literacy among the population. The recent digital leap has enabled even the most remote areas to access goods and services previously out of reach, bridging the urban-rural divide and knitting the country closer together in a web of digital commerce. Encouragingly, the government is already fostering a start-up culture that encourages risk-taking and innovation. Support in the form of funding, mentorship, and access to resources helps budding entrepreneurs to bring their ideas to life and compete in the e-commerce arena.
At its core, competition is the crucible in which innovation is forged, and for consumers, it means more choices, better prices, and enhanced service quality. For the economy, it means increased efficiency and productivity, driving growth, and creating jobs. A competitive culture is not just about keeping prices low; it’s about pushing the boundaries of what’s possible. From drone deliveries to blockchain-based supply chains, the possibilities are limitless.
Siddharth Pai, Technology consultant and venture capitalist
Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Rami G Khouri
Mort Laitner
Donald Low
Ali Fathollah-Nejad
Nikkei Editorial
visit website
