Revised rules may force online retailers to change their business structures, increase operational costs
The logo of e-commerce company Flipkart at its headquarters in Bangalore. Photo: AFP
The confrontation between the Indian government and e-commerce giants
has once again come to a head after authorities came out with a
proposal to amend the e-commerce rules.
The government claims that proposed rules
it had announced on June 21 would protect consumers. It sought comments
from relevant stakeholders by July 6. However, the proposals have
created quite a stir among e-commerce players, with some even
anticipating a change in their business structure and increased costs if
they were to be implemented.
The revised Indian Consumer Protection
(E-commerce Rules) includes several proposals that range from banning
“flash sales,” which benefit only preferred sellers, to holding an
online marketplace responsible for actions of a seller on its platform
and requiring that it set up a complaints system.
The proposed rules cover both domestic and foreign companies operating in the Indian market.
E-commerce
players are also required to ensure that related parties and associated
enterprises are not listed as sellers to consumers directly. This rule
will impact Amazon as it holds an indirect stake in at least two of its
sellers, Cloudtail and Appario.
Walmart-owned Flipkart had rejigged its agreements with some of its sellers in order to comply.
This
rule could even hurt such a domestic player as Tata Group, which is
planning a super app, Tata Digital, and holds stakes in and joint
ventures with many companies. Those affiliates all would be barred from
offering their products on Tata’s marketplace website.
The rules
were formulated following complaints from India’s brick-and-mortar
retailers that Amazon and Flipkart bypass the foreign investment law by
using complex business structures. They were also accused of promoting
preferential sellers, influencing product prices, and following various
anti-competitive practices.
Commerce and Industry Minister Piyush
Goyal had recently accused leading e-commerce players of flouting laws
of the land, adding that many of their practices were against the
interests of consumers.
At a meeting called by Invest India, the
government’s investment promotion and facilitation agency, on Saturday,
the government officials pointed out that the proposed rules were meant
to protect consumers and said they were not as strict as those of other
countries.
However, while making their presentations, Amazon and Tata Group had
argued that some of the clauses were problematic and would have huge
ramifications on the industry.
Representatives of major industry
bodies including the Federation of Indian Chambers of Commerce &
Industry, Confederation of Indian Industry and National Association of
Software and Service Companies attended the meeting. Some of the trade
bodies sought more time for stakeholder response and wanted the deadline
to be extended till the end of this month.
source ; //asiatimes.com
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(With input from news agency language)
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