Decoded: Why commerce minister Piyush Goyal is peeved at some in India Inc

Indian industry would import even if it helped them save just 10 paise in the finished cost of goods, and then lobby to avoid the levy of anti-dumping duties on such imports, Goyal said

Union Minister of Commerce and Textiles Piyush Goyal has stirred up a hornet’s nest by taking on India Inc, specifically the Tata group, which is among the companies that lobbied against the Modi government’s pro-consumer draft e-commerce policies. While Goyal’s comments, made at a Confederation of Indian Industry (CII) event, were streamed live on YouTube, the industry lobbying body later edited the video and subsequently withdrew the entire speech. Goyal had said the Tata group and other Indian companies often lobbied for their interest, while ignoring national interest.

(While Goyal sought to play down his remarks in an interaction with the Times of India on Sunday morning, the CII and Tata group have not commented on the subject.) Small retailers’ bodies, meanwhile, have come out in full support of the minister.

What is Tata’s objection to the proposed e-commerce rules?

According to a report in Reuters, the Tata group had taken a strong stand in a July 3 meeting with government officials that the proposed rules would imp­act its businesses and even bar its own brands or joint venture partners from selling goods on Tata’s upcoming shopping websites.

The Reuters report quoted the Tata group saying in the meeting that the propo­sed rules would greatly increase the compliance burden of the group’s vario­us en­t­ities and interests, and hurt them far more than others. Though the Tata gro­up is currently a small player in the on­line retail business, which is domina­ted by Amazon and Flipkart, it is plann­ing to launch a super app that would of­fer all goods and services sold by the gr­­oup under a single platform. Tata gro­up did not comment on the Reuters report.

The Tata group, however, is not the only one to have lobbied against the proposed e-commerce rules. Others like Amazon and Flipkart have also voiced their concerns, according to media reports.

How will the proposed rules impact Indian companies?

The proposed rules prohibit e-commerce entities from using any information collected through their platform for unfair advantage of its related parties and associated enterprises.

This means, for instance, that Nykaa cannot use the data it collects through its platform to sell its own brand's products. Similarly, Amazon cannot promote Solimo, its private label, over other brands selling similar stuff.

Similarly, Tata will not be able to promote Westside or its joint venture Zara's products over other brands. Likewise, its joint venture Starbucks will also not be able to sell goods on Tata's upcoming shopping websites.

What is the reaction of small trading bodies?

Small retailers and traders have welco­med Goyal’s statements since they were the worst sufferers during the pandemic, with sales plunging as demand shifted to online platforms. The Confederation of All India Traders (CAIT) said that for the first time an elected government representative has talked about inclusive growth of big and small businesses, which bodes well for the growth of India.

Media reports quoted CAIT National President B C Bhartia as saying there are 80 million small and me­d­ium tra­d­ers whose survival and well-being has been co­m­pletely ignored by the corp­orate houses who have collu­ded with multinational co­­mpanies to plunder India’s retail market and de­stroy the business ecosystem.

What was the minister’s ‘nationalistic’ jibe about?

Goyal also said Indian companies were failing to take on competition from the multinationals and asked Tata Steel to demonstrate if it can sell its products in Japan and Korea, arguing that companies in those countries are “nationalistic” and won’t buy imported steel. On the other hand, Indian industry would import even if it helped them save just 10 paise in the finished cost of goods, and then lobby to avoid the levy of anti-dumping duties on such imports, he said.

What did the minister say on foreign direct investment (FDI)?

Goyal said many Indian companies are structuring transactions in such a way that it violates the FDI norms. Goyal said instead of asking for restrictions on import of foreign goods, Indian companies should instead focus on increasing their competitiveness.

And on the new start-up fund?

Goyal asked Indian companies to pitch in to help start-ups. While most of the groups are spending money on their own start-ups, very few, he said, have come forward to help others out. Goyal asked CII members to set up a start-up fund to help new entrepreneurs.

Tata Trusts Chairman Ratan Tata, however, has invested in several start-ups in his personal capacity, including Urban Ladder, Snapdeal, Lenskart, NestAway and others. Recently, the group took over a pharma retailer e-commerce company (1mg) and grocery retailer, Big Basket. Reliance group, through its different businesses, has majority stake in Urban Ladder, digital pharma marketplace Netmeds, software firm C-square, etc. And Wipro’s founder Azim Premji has a private equity and venture capital family office, Premji­Invest, that invests in start-ups.