FMCG distributors demand govt action against unregulated quick commerce growth: Report
The All India Consumer Products Distributors Federation (AICPDF) noted that Q-commerce firms used 80 percent of the funds around customer acquisition strategies instead of creating cutting-edge innovations or sustainable growth models for the retail sector.
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The distributor body of the Fast-moving consumer goods product has written a letter to the Union Finance Ministry, raising concerns about the fund accumulation by the quick commerce platforms and predatory pricing.
According to media reports, the All India Consumer Products Distributors Federation (AICPDF) noted that Q-commerce firms used 80 percent of the funds around customer acquisition strategies instead of creating cutting-edge innovations or sustainable growth models for the retail sector.
The AICPDF alleged that quick commerce firms were raising funds through deep discounting practices and predatory pricing, causing pressure on small retailers and distributors.
In the letter, the AICPDF wrote to the finance ministry, "These businesses cannot compete with heavily subsidized prices leading to a significant loss of livelihood for eight crore traditional retail traders".
The FMCG distributor body has requested the government to temporarily cease new investments into quick commerce platforms until the investigation by the Competitive Commission of India (CCI) and other authorities over FDI regulations, and labour laws conclude.
In October, AICPDF wrote a letter to CCI underscoring the traditional supply chain problems arising from the rapid growth of quick-commerce platforms, including their appointment by several companies as direct distributors of FMCG items.
Earlier this month, the Food Safety and Standards Authority of India (FSSAI) asked e-commerce and quick-commerce food business operators (FBOs) to ensure a minimum shelf life of 30 percent or 45 days before the expiry of products at the time of delivery to consumers.
Separately, CAIT has also requested the government to revise the automatic Foreign Direct Investment (FDI) route for Q-commerce marketplace entities, limiting FDI to investments in fixed assets through a government approval process. It has also recommended government plug the loopholes of the FDI policy related to sale of the food item producers/manufacturers that are in conflict with the FDI policy of the retail trading sector that provides a backdoor entry of FDI in Multi-Brand Retailers selling food products. Additionally, CAIT suggested stricter enforcement of the Competition Act and FEMA to maintain healthy competition and protect small retailers from unfair practices.
