Recently the Confederation of All India Traders (CAIT) demanded a luxury tax on purchases made through e-commerce and quick commerce platforms. Seconding with CAIT, experts said that a balanced approach is needed to tackle the issue.
Speaking to Tehelka, Mukul Goyal, Co-Founder of Stratefix Consulting said, “CAIT’s concerns about e-commerce and quick commerce platforms undercutting small traders are valid, given that 10 lakh shops reportedly closed in two years. However, these platforms also enable 30 per cent of D2C brands to reach urban consumers.”
“A balanced approach is needed: enforce existing FDI policies to prevent predatory pricing while recognising the digital platform’s role in modernising retail. Over 70 per cent of metro retailers operate from rented shops, indicating structural challenges beyond e-commerce,” he added.
He said that policy should protect traders without stifling innovation that benefits India’s $9.95 billion quick commerce sector.
While CAIT has also demanded a regulatory body to control pricing and ensure transparency, Goyal suggests that over-regulation risks stifling growth in India’s USD 1.2 trillion digital economy.
Speaking on the luxury tax that has been demanded, he said a 28 per cent GST would raise platform costs, potentially increasing consumer prices by 10-15 per cent.
“Quick commerce, operating on 5-7 per cent margins, might reduce discounts or delivery incentives. While CAIT argues convenience is a “luxury”, urban consumers may absorb costs for 10-minute deliveries. However, SMEs relying on these platforms could face margin pressures, risking the 30 per cent revenue share D2C brands derive from quick commerce,” he said.
It’s essential to assess the broader economic implications and ensure that such fiscal measures do not stifle innovation or growth in the digital commerce sector, he added.
