FRAI Warns Against Growing Illicit Trade and Market Distortion in India’s Online Retail Ecosystem

The seminar highlighted that both illicit trade and unfair market practices are adversely affecting genuine businesses, government revenues, consumer trust and the livelihoods of lakhs of small traders across the state.

The seminar witnessed the presence of Hon’ble Tariq Ansari, Chairman of Telangana State Minorities Commission, Government of Telangana; Hon’ble Mr. R. Sanjay Kumar, Asst Commissioner of Police, Central Zone, Hyderabad and Mr. Afzaluddin, Senior Advocate High Court of Telangana along with senior representatives of various trader bodies and retail associations from across Telangana.

Retailers further highlighted that while quick commerce and e-commerce platforms are rapidly transforming the retail landscape and making products instantly accessible to consumers, the same ecosystem is also creating serious concerns around the rapid spread of illicit trade and counterfeit products. Participants stated that flash sales, unrealistic discounting, aggressive pricing strategies and the constant push for ultra-fast delivery have created an environment where consumers are often unable to differentiate between genuine and counterfeit products.

The participants pointed out that today almost everything — from food products, groceries and personal care items to skincare products, electronics and even premium mobile phones worth thousands of rupees — is being delivered within minutes through quick commerce and e-commerce platforms. However, this extreme accessibility and race for cheaper prices are also opening dangerous entry points for banned, illegal and counterfeit products to penetrate the market at an unprecedented scale.

According to the retailers, illicit traders and unethical sellers are increasingly exploiting these rapidly expanding digital platforms to push counterfeit and non-compliant products into the market, taking advantage of weak monitoring mechanisms and the growing consumer obsession with deep discounts and instant availability. Retailers warned that consumers are gradually becoming more price-sensitive than quality-conscious, creating fertile ground for illicit trade to flourish unchecked across digital commerce channels.

The participants also stated that while the rapid rise of such platforms is adversely impacting consumers through the circulation of low-quality and potentially unsafe products, it is equally devastating for genuine offline retailers who spend years building trust, ensuring product authenticity and serving their local communities with accountability. Retailers emphasised that unfair market practices, uneven competition and aggressive pricing structures are making it increasingly difficult for traditional traders to survive despite working tirelessly for 14 to 18 hours every day to sustain their businesses, educate their children and support their families. Participants stressed that this is no longer merely a business issue, but a serious social and livelihood concern affecting millions of honest small retailers across the country.

Tariq Ansari, Chairman of Telangana State Minorities Commission, Government of Telangana, said, “Illicit trade and unfair market practices are emerging as serious challenges for both consumers and honest businesses across the country. Small traders and neighbourhood retailers, who work tirelessly every day to sustain their livelihoods with integrity, are among the worst affected by counterfeit products, illegal supply chains and uneven market competition. The growing spread of fake and non-compliant goods not only damages genuine businesses but also weakens consumer trust and market transparency. We urge the State Government to intervene promptly in this matter through strict enforcement measures, coordinated action against illicit networks and policy support to safeguard the interests of genuine traders and consumers alike.”

R. Sanjay Kumar said, “Illicit trade and the unchecked circulation of counterfeit products have become a serious concern not only for businesses and consumers, but also from a law enforcement and public safety perspective. Today, digital platforms and rapid-delivery ecosystems are expanding at an unprecedented pace, but in many cases there is insufficient awareness regarding product authenticity, cyber risks and illegal supply chains. Consumers are often attracted by heavy discounts and instant availability without fully understanding the risks associated with fake, adulterated or non-compliant products.

Small retailers and neighbourhood traders, who have served communities with accountability and trust for decades, continue to play a very important role in society and the economy. It is important that consumers remain aware, vigilant and responsible while making purchasing decisions. Stronger awareness, better enforcement and greater cooperation between authorities, businesses and citizens are essential to curb illicit trade and protect both consumers and genuine retailers.” – Mr. Sanjay Kumar added

Speaking at the seminar, Mohammad Salahuddin Dakhni, Vice President, All India FRAI and President, Telangana State Chapter, FRAI, said, “Small retailers and kirana stores are not just business establishments; they are the backbone of India’s local economy and community life. However, the increasing prevalence of unfair trade practices in modern retail markets is creating serious challenges for traditional retailers. Predatory pricing, deep discounting, unchecked expansion of quick commerce and e-commerce platforms, and the growing circulation of counterfeit products are distorting fair market competition and threatening the survival of lakhs of small traders. If timely corrective measures are not taken, India risks damaging its traditional entrepreneurial culture that has sustained generations of self-employed families.”

During the seminar, participants highlighted that the rapid expansion of platform-driven retail models and the growing circulation of counterfeit and non-compliant products are creating serious challenges for traditional businesses. Retailers stated that while small traders operate with limited margins and high accountability, several large platforms continue to dominate markets through aggressive discounting and rapid expansion strategies. The participants also warned that illicit trade and counterfeit goods are harming genuine businesses, weakening consumer trust and adversely affecting the livelihoods of millions of small retailers across the country. While acknowledging the importance of technology and innovation, they stressed that growth in the retail sector must remain fair, transparent and inclusive.

The Association is a body of over 2 lakh micro, small and medium retailers from across Telangana. It also represents the livelihoods of over 10 lakh poorest of the poor retailers and their families and is known for consistently raising issues concerning their lives and livelihoods.

The participants collectively called for stronger regulatory oversight, fair competition policies and a level playing field for small retailers. They also urged policymakers to ensure measures that ensure complete eradication of illicit and illegal products in the online retail ecosystem

The seminar concluded with a collective appeal to the government, policymakers and industry stakeholders to protect the interests of small retailers and preserve India’s traditional entrepreneurial ecosystem, which continues to play a critical role in employment generation, local commerce and economic stability.