Tighter e-commerce norms may lead to short-term job losses
Around 350,000 delivery personnel were working with e-tailers as of earlier this year.
Bengaluru: The threat of job losses in the supply chain network has emerged as a major concern following the announcement of new foreign direct investment (FDI) guidelines that seek to tighten the noose on e-commerce companies. This assumes significance ahead of the 2019 Lok Sabha polls where jobs are already shaping to be a key campaign issue for political parties.
The updated Press Note 3 put out by the department of industrial policy and promotion on Wednesday spelt out guidelines for e-commerce marketplaces, stating that the platforms cannot influence pricing of products or sell products from entities they have an equity in. It also spelt out several other updates to the FDI rules in e-commerce.
However, most analysts believe the new norms may lead to short-term job losses, lasting up to six months, as companies work their way around the guidelines.
“I expect strict guidelines for e-commerce companies to lead to a temporary pause in hiring delivery and warehouse executives,” said a human resource consultant requesting anonymity. “However, there will not be a long-term impact because the e-commerce potential in India is large and may not be derailed because of this.”
The e-commerce industry in India is set to grow from $35 billion at present to over $100 million by 2022, according to a recent report by industry body Nasscom and PwC India. This is expected to trigger more than a million jobs, said the report, making this sector an important avenue for employment generation in the country.
As of early this year, around 350,000 delivery personnel were working with e-commerce companies, according to industry estimates, with jobs expected to grow 18% over the next year. This may change if the norms retain their present form.
“We expect e-commerce companies to either figure out a work-around or lobby with the government to take some portions out of the guidelines,” said an analyst tracking the space, requesting anonymity. “However, if rules stay in their present form, the number of e-commerce orders will go down, warehouse expansion plans may take a hit and the utilization of delivery executives will reduce, leading to significant job losses.”
The threat of job losses in the supply chain network has emerged as a major concern following the announcement of new foreign direct investment (FDI) guidelines that seek to tighten the noose on e-commerce companies. This assumes significance ahead of the 2019 Lok Sabha polls where jobs are already shaping to be a key campaign issue for political parties.
The updated Press Note 3 put out by the department of industrial policy and promotion on Wednesday spelt out guidelines for e-commerce marketplaces, stating that the platforms cannot influence pricing of products or sell products from entities they have an equity in. It also spelt out several other updates to the FDI rules in e-commerce.
However, most analysts believe the new norms may lead to short-term job losses, lasting up to six months, as companies work their way around the guidelines.
“I expect strict guidelines for e-commerce companies to lead to a temporary pause in hiring delivery and warehouse executives,” said a human resource consultant requesting anonymity. “However, there will not be a long-term impact because the e-commerce potential in India is large and may not be derailed because of this.”
The e-commerce industry in India is set to grow from $35 billion at present to over $100 million by 2022, according to a recent report by industry body Nasscom and PwC India. This is expected to trigger more than a million jobs, said the report, making this sector an important avenue for employment generation in the country.
As of early this year, around 350,000 delivery personnel were working with e-commerce companies, according to industry estimates, with jobs expected to grow 18% over the next year. This may change if the norms retain their present form.
“We expect e-commerce companies to either figure out a work-around or lobby with the government to take some portions out of the guidelines,” said an analyst tracking the space, requesting anonymity. “However, if rules stay in their present form, the number of e-commerce orders will go down, warehouse expansion plans may take a hit and the utilization of delivery executives will reduce, leading to significant job losses.”
“E-commerce is a job creating sector, helping small manufacturers sell their products online,” said an industry executive. “In its current form, these guidelines will lead to job losses in manufacturing and logistics sectors.”
Meanwhile, Amazon India said in a statement on Friday that it remains committed to the sellers on its platform. “With more than 400,000 small and medium businesses on our marketplace enabling customer choice to buy anything online, we remain committed to a long term investment in our vision of transforming how India buys and sells and generating significant direct and indirect employment.”
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