This is not merely a struggle for market dominance among Jio Mart, Amazon, Walmart, or the Tata Group within the projected $2 trillion Indian retail landscape by 2030. It transcends the aspirations of Chinese companies like Alibaba and Tencent, who, amid Indo-Chinese tensions, sought but withdrew from the untapped market. It’s more than the fate of 20 million small establishments (kirana stores) and the 40 million families reliant on the informal and formal retail network. The situation is more ominous.
In times of crisis, companies embracing digital tools tend to thrive. During demonetization, entities like PayTM flourished, portraying themselves as homegrown startups challenging giants. However, PayTM, now and even more so, is not an entirely Indian-owned entity. With Chinese investors from Alibaba at one end and a Warren Buffet-backed U.S. entity on the other, it epitomizes the internationalization of capital. Assertions about local versus foreign ownership are often mere marketing strategies, as those championing swadeshi principles have, over time, acquiesced to foreign direct investment (FDI) in retail.
Crony capitalism spawns monopolies that stifle competition, inhibit innovation, and discourage smaller businesses pivotal for economic dynamism and job creation. Major e-retailers, by procuring goods in bulk, dictate prices and impose onerous terms on manufacturers. As they leverage Artificial Intelligence and streamlined processes, their delivery costs to consumers may undercut the procurement prices of kirana stores. E-retailers are not only becoming super distributors to kirana stores but are also utilizing them as pick-up points. Simultaneously, kirana stores are coerced into increasing minimum order sizes, driving up inventory costs and causing losses. Over the next two decades, a majority of kirana stores, along with supply chain intermediaries and countless small enterprises supplying them, are predicted to close, leaving consumers with a monopoly.
The social costs of these transformations, where unorganized sector jobs go undocumented while e-retail job additions are heralded, should be acknowledged. The potential loss of jobs in the unorganized sector is a significant challenge, especially in the context of high unemployment rates. E-retail giants, with their financial clout, can run smaller players out of business and dictate terms to credit card companies and e-payment platforms, impacting public sector banks. The convergence of e-retail and e-commerce further blurs distinctions.
E-retail’s significance lies not only in selling merchandise but also in data mining and advertising. Corporate entities leverage data to target and influence consumer behavior, and aggregated data allows for market manipulation on a large scale. The shift of advertising revenue from traditional media to digital platforms poses a threat to independent media, a pillar of democracy. As private companies like Facebook and Google assert control over communication platforms and influence public opinion, questions about the survival of democracy emerge. European countries are contemplating legislation to curb big tech’s monopolistic behavior and safeguard data anonymity. The question for India is whether it can ensure that businesses work for the people, given the perceived inadequacy of existing regulations, enforcement, and anti-trust legislation. In this scenario, people’s activism may be the only safeguard against the encroachment of oligarchs on the nation.