India plans tighter e-commerce rules amid complaints over Amazon, Flipkart

Altex Industries

22/06/2021 24:30

(Repeats, no changes to text)
    By Aditya Kalra
    NEW DELHI, June 21 (Reuters) - India proposed banning flash
sales on e-commerce websites and said on Monday their affiliate
entities should not be listed as sellers on their platforms, in
a proposed tightening of rules that could hit Amazon and
Walmart's Flipkart. 
    The Ministry of Consumer Affairs' rules, which were released
in a government statement, come amid complaints by
brick-and-mortar retailers that foreign e-commerce players
bypass Indian laws by using complex business structures.
    Amazon  AMZN.O  and Flipkart say they comply with all Indian
laws. Amazon said on Monday it was reviewing the draft rules and
had no immediate comment, while Walmart's Flipkart  WMT.N  did
not respond to a Reuters request for comment. 
    Under the stricter proposals, e-commerce companies should
not hold flash sales in India. These are hugely popular during
festive season, but have faced anger among offline sellers who
say they cannot compete with the deep discounts online.
    E-commerce firms must also ensure that none of their
"related parties and associated enterprises" are listed as
sellers on their shopping websites, and no related entity should
sell goods to an online seller operating on the same platform.
    The changes could impact business structures used by
Flipkart and Amazon in the fast growing Indian e-commerce
market, industry sources and lawyers said.
    A Reuters investigation http://reut.rs/2OCOT2W in February
showed Amazon had given preferential treatment to a small group
of sellers for years. Amazon holds an indirect stake in two of
the top sellers on its website, but says it does not give any
preferential treatment.
    Foreign e-commerce players must not make direct sales to
consumers, and can only operate a marketplace for sellers.
    Amazon and Flipkart are also regulated under India's foreign
investment rules for e-commerce, and it was not clear if the
proposed consumer ministry rules will supersede them or not.
    The proposal, which is applicable to both Indian and foreign
players, is open for public consultation until July 6, the
Indian government statement said.
    The rules also call on companies to make suggestions of
alternative products before customers make purchases "to ensure
a fair opportunity for domestic goods."
    "This proposal basically changes the way e-commerce is
structured. This is way beyond consumer rules - this is
basically like an e-commerce industry policy," one e-commerce
executive said, adding: "It will be extremely disruptive."
    Amazon and Flipkart are separately locked in a court battle
with federal antitrust watchdog to stall an investigation into
their business practices.  urn:newsml:reuters.com:*:nL3N2NZ1BS  

 (Reporting by Aditya Kalra in New Delhi;
Editing by Alexander Smith)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))