Kirana vs Q-com on table

The government is set to examine concerns over quick commerce companies potentially undermining businesses of local kirana stores, particularly in the context of the draft Digital Competition Bill, according to official sources.

The Ministry of Consumer Affairs recently raised the issue with the Ministry of Corporate Affairs during discussions around the proposed legislation.

“We need to assess if and how the Bill can address these concerns and explore further steps to include provisions to keep a check,” a senior official stated.

Email queries sent to the Ministry of Corporate Affairs and the Ministry of Consumer Affairs did not elicit any response at the time of going to press.

The Bill proposes ex-ante (preventive) regulations, which would require digital companies to notify the Competition Commission of India (CCI) if they meet the criteria to be classified as systemically significant digital enterprises (SSDEs) based on a set of qualitative and quantitative parameters.

The government, according to reports, may refine the SSDE criteria to broaden its scope, potentially encompassing a wider variety of digital companies, including social networking platforms and online marketplaces.

Union Commerce and Industry Minister Piyush Goyal last week had said that while the government is not opposed to e-commerce, it is committed to ensuring a level playing field between online and offline businesses.

Goyal previously expressed concern that the rapid expansion of the e-commerce sector could be a “cause for concern” rather than a “matter of pride”, warning that it might result in job losses within traditional retail.

Industry experts note that companies operating in this space are well aware of the growing regulatory scrutiny.

Many are already working to incorporate kirana stores into their business models.

Sources familiar with the matter indicate that Flipkart — a recent entrant in the quick commerce market — is running its service, ‘Minutes,’ on a kirana store model.

Rather than relying heavily on dark stores, Flipkart has partnered with several kirana stores, equipping them with the necessary supply chain technology to facilitate quick deliveries.

However, players in the quick commerce sector argue that the regulatory pushback is premature.

“The sector is too nascent for this level of regulatory scrutiny.

"While there may be some initial impact on kirana stores, quick commerce companies are actively working to integrate these stores into their business models.

"It will take time to resolve these challenges,” said an executive from a quick commerce firm.

Recently, the industry body All India Consumer Products Distributors Federation sent an email to the Ministry of Commerce and Industry, highlighting that the rapid growth of quick commerce platforms posed significant challenges to traditional retail and the FMCG distribution network across the country.