In a letter to the Union Finance Ministry, the distributor group for fast-moving consumer goods expressed worries about exploitative pricing and the accumulation of funds by rapid commerce platforms.
The All India Consumer Products Distributors Federation (AICPDF) reported in the media that Q-commerce companies spent 80 per cent of their expenditures on user acquisition tactics rather than developing innovative products or long-term growth models for the retail industry.
The AICPDF said that predatory pricing and extreme discounting were being used by rapid commerce companies to raise money, putting pressure on wholesalers and small shops.
In the letter, the AICPDF wrote to the finance ministry, "These businesses cannot compete with heavily subsidised prices leading to a significant loss of livelihood for eight crore traditional retail traders".
The government has been asked by the FMCG distributor association to temporarily stop allowing new investments in fast commerce platforms until the Competitive Commission of India (CCI) and other agencies have finished their inquiry into employment laws and FDI restrictions.
In a letter to CCI in October, AICPDF highlighted the conventional supply chain issues brought on by the quick-commerce platforms' explosive expansion, including the fact that multiple businesses have chosen them to be direct distributors of fast-moving consumer goods.
E-commerce and quick-commerce food business operators (FBOs) were urged earlier this month by the Food Safety and Standards Authority of India (FSSAI) to guarantee a minimum shelf life of thirty percent or forty-five days prior to the expiration of products at the time of delivery to customers.
In addition, CAIT has asked the government to update the Q-commerce marketplace entities' automatic Foreign Direct Investment (FDI) pathway, restricting FDI to fixed asset investments that require government approval. Additionally, it has suggested that the government close the gaps in the FDI policy concerning the sale of food item manufacturers and producers that contradict with the retail trade sector's FDI policy, which allows FDI to enter multi-brand retailers that sell food products through a backdoor. Furthermore, in order to preserve healthy competition and shield small shops from unfair acts, CAIT recommended stronger enforcement of the Competition Act and FEMA.
