The Indian Government on Wednesday revamped its e-commerce norms in an attempt to bring a much-needed respite to offline retailer and brands, and moderate the unfair power yielded by e-commerce behemoths such as Flipkart and Amazon, largely through predatory pricing in their mega sales. Under the new rules laid down by the Ministry of Commerce and Industry, e-commerce firms are barred from selling products of the companies in which they have stakes.
An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,”
Statement from the Ministry of Commerce and Industry
Online retailers are also restrained from mandating companies to sell their products exclusively on their websites. This is an issue that is especially prevalent in the smartphone industry where phones are available almost exclusively on either Amazon or Flipkart. This move by the Ministry of Commerce would be favored by the customers as well as the offline retailers. Because this way, customers wouldn’t be restricted to one single gateway for the purchase of phones and could look at several options before taking a decision. And making these products available to retailers could significantly boost their sales.
This apart, the statement also mentions that the cash back offers provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory. These companies are also required to file a certificate and a report confirming compliance of guidelines by September 30th of every year for the preceding fiscal.
This move by the government comes as a result of several complaints raised by local retailers on deep discounts offered by online sellers. Especially during the festive season where these online sales severely impede the sales of these offline sellers.
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