As e-commerce continues to reshape India’s retail industry at an unprecedented pace, policymakers are grappling with a dilemma: how to protect small retailers without stifling the digital economy. With online platforms and quick commerce services rapidly gaining ground, the urgent question is whether India can foster a healthy coexistence between traditional kirana stores and their well-funded digital counterparts.
In response to growing concerns, a parliamentary standing committee has directed the Competition Commission of India (CCI) to outline steps taken to safeguard small retailers. According to the committee, small business owners represent nearly 20% of India’s population and are struggling to survive amid deep discounting and other alleged unfair practices by large e-commerce firms. The committee’s request is part of its wider consultations for a report titled ‘Doing Business in India — The Way Forward.’
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This scrutiny comes at a time when resentment among traditional retailers is intensifying. The All India Consumer Products Distributors Federation (AICPDF) has filed a case against quick commerce companies such as Zepto, Blinkit, BigBasket, and Swiggy Instamart, alleging predatory pricing practices. In its petition, the federation argued that the unchecked growth of these firms is severely undermining the viability of local kirana stores.
At the heart of the issue is the cash-burn model adopted by many online platforms, where deep discounts are used to rapidly gain market share—often at the cost of sustained profitability. While this may benefit consumers in the short term, critics warn that the model is neither sustainable nor conducive to fair competition. It begs the question: what is the long-term vision for these platforms—and at what cost?
Searching for policy solutions
Beyond its inquiry to the CCI, the government is also weighing industry suggestions such as introducing a minimum support price (MSP) mechanism on Maximum Retail Price (MRP), especially for fast-moving consumer goods (FMCGs). The AICPDF has proposed a 10% floor below MRP for FMCG products and a 2-3% margin for non-FMCG items to curb aggressive discounting.
However, these proposals face practical and philosophical hurdles. Globally, there is no precedent for an MSP-like system for consumer goods. Implementing price floors could also deter investment in startups and digital retail, and potentially run counter to broader efforts to contain inflation. It’s a tough needle to thread.
In parallel, policymakers are placing hope in the proposed Digital Competition Bill, which aims to pre-emptively address monopolistic practices by large digital platforms. Inspired by legislative frameworks in the European Union, Australia, and Japan, the bill is still under deliberation as the government seeks to tailor global best practices to Indian realities.
E-commerce vs kirana: Building bridges, not walls
While regulation is a key lever, integration may be a more durable solution. The Open Network for Digital Commerce (ONDC), a government-backed initiative to democratise digital retail, is emerging as a promising bridge. ONDC currently boasts over 370,000 sellers and service providers across 588 cities—nearly 70% of the country. Giants like Flipkart, Amazon, Paytm, and PhonePe’s Pincode have joined the network, extending its reach across sectors such as food delivery, healthcare, and fintech.
Though the platform still faces operational teething issues, ONDC represents a serious attempt to bring small retailers into the digital fold, rather than leave them behind.
Private sector players, too, are exploring hybrid models. Amazon and Flipkart are onboarding kirana stores as last-mile delivery partners and fulfilment hubs. Quick commerce firms like Dunzo and Swiggy Instamart are piloting partnerships where kirana stores act as micro-warehouses, enabling faster delivery times while ensuring business for local retailers.
These collaborative models could be the blueprint for a more inclusive retail ecosystem—one where digital growth doesn’t mean offline extinction.
Adapt or perish
The harsh truth is that many small retailers are struggling to adapt. Unlike quick commerce players promising 10-minute deliveries, most kirana shops lack the tech infrastructure and logistical muscle to compete. But they do possess advantages that e-commerce cannot replicate easily: the trust of neighbourhood customers, an understanding of local demand, and the loyalty of India’s cash-poor but time-rich population.
If they are to survive, kiranas must modernise and leverage their strengths. With the right support, strategic partnerships, and digital onboarding, these small businesses can remain integral to India’s retail fabric.
The rise of e-commerce has undeniably transformed consumer behaviour, but it does not spell doom for traditional retail. With policy reforms and collaborative innovation, India can indeed find a middle path—where kirana stores and e-commerce platforms coexist, compete, and even complement one another.