Regulatory Bias Towards Ecommerce Can Undermine MSMEs Growth: Experts
Industry experts address critical regulatory challenges impacting MSMEs in India’s ecommerce landscape
India’s approach to ecommerce regulation risks undermining micro, small, and medium enterprise (MSME) growth in the country, according to experts.
By focusing on only one segment of the market, current regulations may unintentionally hamper MSME competitiveness and seller autonomy, experts stated while speaking at an event hosted by Policy Consensus Centre (PCC).
A cohesive regulatory framework is necessary to ensure MSMEs can compete fairly, boost transparency, and support India’s economic vision of reaching USD 1 trillion in exports.
Industry experts addressed critical regulatory challenges impacting MSMEs in India’s ecommerce landscape and talked about disparities between regulatory approaches and their effect on MSMEs' competitiveness and autonomy in the digital marketplace.
Nirupama Soundararajan, Founder, Policy Consensus Centre said, “The Competition Commission of India (CCI) and regulators must expand their perspective beyond just foreign players and consider practices across the entire retail sector. It’s essential to develop a mature understanding of how these practices impact competition and fairness."
Soundararajan added that achieving parity across the board is critical for fostering a level playing field that empowers all businesses, regardless of their origin. Only then can we ensure that the interests of MSMEs and independent sellers are truly safeguarded in our evolving marketplace.
During the discussion, panellists argued that regulatory focus on large online platforms can create a flawed perception of market dominance.
Meghna Bal, Director, ESYA Centre emphasised, “An emerging trend in antitrust is the tendency to narrow the market scope, which inadvertently increases the likelihood of large firms being labelled as dominant. This focus on large online marketplaces as dominant players is fundamentally flawed."
Bal mentioned that as retail evolves, especially online retail, there are many joint ventures increasingly concentrated in the hands of a few players, spanning both offline and online sectors. This reality underscores the need for a nuanced understanding of market dynamics considering the complexities of both retail formats.
Experts also stated that ecommerce platforms play a vital role in empowering MSMEs and independent sellers, and their success depends on fostering good business practices that uphold seller autonomy. For the digital marketplace to thrive, platforms need to streamline processes and maintain open, ongoing engagement with sellers.
Lloyd Mathias, Business Leader, Angel Investor and Business Strategist noted, “To foster a fair and competitive marketplace, there is a need for more regulatory stability and robust oversight on unfair trade practices. Sellers should not be held to ransom by platforms dictating price points or using threats regarding pricing operations.
Mathias added, "Just as we hold the offline world accountable, we must extend that scrutiny to online platforms, where unfair trade practices can weaken seller autonomy. Furthermore, we must recognize that there’s no place for nationalism in consumer markets; the focus should be on ensuring fair competition that benefits all stakeholders."
USD 12 Bn Ecommerce Opportunity
Notably, Shiprocket, an ecommerce enablement platform, has projected the Indian festive ecommerce market to reach USD 12 billion during the key months from October to December 2024. This represents a substantial 23 per cent increase compared to USD 9.7 billion in 2023.
It stated that the growth is largely driven by consumer demand in categories like fashion, electronics, beauty, and personal care, along with a surge in quick commerce, which alone is expected to contribute USD 1 billion in GMV.
India’s ecommerce export market is presently valued at approximately USD 3 to 4 billion but is expected to surge to USD 200 to 300 billion by 2030, as MSMEs continue to tap into global markets and government initiatives, like DGFT, further enhance India’s export capabilities. Shiprocket’s data revealed an increasing global appetite for Indian goods during the festive season, particularly through platforms such as Amazon Global and Flipkart’s Global Stores.
“As we enter the 2024 festive season, the momentum for ecommerce continues to build across Bharat, particularly in tier-2 and tier-3 cities. With the rise of quick commerce and the increasing global appetite for Indian products, we are excited to support MSMEs in tapping into this tremendous USD 12 billion opportunity," said Saahil Goel, Managing Director (MD) and Chief Executive Officer (CEO), Shiprocket.
Meanwhile, industry experts noted that this means regularly seeking feedback, making continuous improvements, and addressing sellers’ needs proactively to make doing business easier. When ecommerce platforms prioritise transparent and seller-friendly practices, they protect the autonomy that is fundamental to fair competition and help cultivate a balanced, thriving ecosystem that benefits both sellers and consumers.
