Recently, the Indian Ministry of Home Affairs circulated a notice instructing the extension of #Corona Virus related #lockdown till 3rd of May. However, it allowed the operation of essential services and businesses from 20th of April onwards in areas which didn’t have any Corona cases. This included manufacture of IT hardware within the country and the supply of goods via the E-commerce platforms. However, all retail sales of goods except the essentials such as staple food, grocery and medicines remain suspended and the retailers and the E-commerce platforms needed to get an authorisation from the police department to operate.
This is actually a commendable move by the government in the light of complete disruption of supply chain in the country and of imports from China, on which the IT sector almost entirely depends. The government’s policy seems to be to encourage indigenous manufacture of IT products and to integrate IT products in its Make in India programme. The IT channel community had welcomed the suggestion of bringing IT products under Make in India and had shown enthusiasm in suggesting the route to achieving this.
It seems that the government has acted in sync with these ideas, which are really welcome as India can become a powerhouse only by becoming a self-sustained producer of technology and not by merely serving as a market for multinational companies. The government should ensure that the indigenous innovations and technological manufacture should be encouraged under Make in India and it should not become a vehicle for simply giving access to the multinational companies to establish factories in India.
The IT channel associations however, have taken exceptions to the MHA circular and have been asking the government to review its instructions and include the retail sale of IT hardware in its allowed list. In a separate discussion with the IT channel community, some of them said that the giant multinational manufacturers of the IT hardware also sell directly on the E-commerce platforms which cuts into the retail sale of the channels. Responding to a question about why they didn’t join the seller programmes of the E-commerce platforms, they said it was not profitable for them to do so and that the multinational manufacturers didn’t support this. Further, the E-commerce platforms gave a discount which made them more lucrative than the channel community’s price.
Because of this conflict, the IT channel community sees the E-commerce platforms as their rivals and they have been leading a campaign against the E-commerce platforms for quite some time.
There is a need to understand this entire problem in its proper context. The E-commerce platforms are here to stay. Just because the IT channels don’t want them around, they’re not going to go away. The simple reason is that the end customers find them extremely useful and also cost effective. There is no way the IT manufacturers are going to let go the cost-effective, modern technology of E-commerce platforms. In a nutshell, the channel community is fighting a losing battle against the E-commerce platforms. They need to understand that the E-commerce platform is a more advanced technology than the retail shops and it’s not going to be rolled back. To ask the government to do away with the E-commerce platforms and to insist on continuing to sell in physical retail shops is to ask everyone to go back to an outdated technology and to stick to more expensive models of selling, which is not going to happen. Rather, they have to continuously adapt to the changing technologies.
We need to think about how the IT channel community can be helped to integrate into the E-commerce platforms and migrate to online selling rather than retail selling. First, the IT manufacturing companies need to give them an incentive for migrating onto the E-commerce selling platforms and for selling online. Second, they should negotiate with the government to give the channel members incentives for migrating onto the E-commerce platforms. Third, both the government and the IT manufacturers need to negotiate with the E-commerce platforms to give the channel community incentives for selling online rather than through retail. Unless these are done, the conflict between the channels and the E-commerce platforms will remain and will be detrimental to the IT hardware business.