Amazon, Walmart face tough rules as India aids small traders
The trade ministry said that e-commerce companies like Amazon.com Inc and Walmart Inc.’s Flipkart, which act as a facilitator between the buyer and seller by providing an online market place, must treat all vendors equally by providing the same terms
India tightened rules for foreign investment in e-commerce companies to check predatory pricing and deep discounts that threatened the domestic retail industry.
E-commerce companies like Amazon.com Inc and Walmart Inc.’s Flipkart, which act as a facilitator between the buyer and seller by providing an online market place, must treat all vendors equally by providing the same terms, the trade ministry said in a circular Wednesday. Cash back provided to buyers shall be fair and the company will not influence the price of goods or services. The new rules will be effective February 1.
The move against online retail will help Prime Minister Narendra Modi’s Bharatiya Janata Party win support of local traders — a key voting bloc for the party that suffered defeats in provincial elections this month. The south Asian nation is key to global retailers as it has a billion plus population but only a few million of them own smartphones, offering them the opportunity of exponential growth in online consumption.
The government barred e-commerce companies from forcing a seller to feature products exclusively on their platforms. A certificate confirming the compliance of all rules and an auditor’s note will have to be submitted to the Reserve Bank of India by September 30 every year for the preceding financial year.
“It’s a big achievement after a long struggle,” Praveen Khandelwal, secretary general of Confederation of All India Traders, said in a statement. “If it is implemented in proper spirit, malpractices and predatory pricing policy and deep discounting of e-commerce players will be a matter of past.”
Amazon and Flipkart will make presentations before India’s finance and commerce ministries to contest the new rules, local news channel BTVI said in a Twitter post, citing unidentified people.
Amazon is evaluating the rules, a spokesperson for Amazon India said in an email. Flipkart didn’t immediately respond to a message seeking comments.
Some of the key highlights of the policy are:
■ E-commerce entity providing a marketplace will not exercise ownership or control over the inventory.
■ Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity.
■ An entity having equity participation by e-commerce marketplace or its group companies will not be permitted to sell its products on the platform run by such marketplace entity.
- Tesla to cut workforce by 7%, sees smaller profit in Q4
- Wipro spins out govt business as separate segment
- Vibrant Gujarat meet: Ambani, Adani, Birla, others line up big investments
- Wipro announces 1:3 bonus; Q3 net profit rises 30%
- RIL to invest Rs 3 lakh crore in Gujarat in next 10 years : Mukesh Ambani
Editor's Picks »
- To boost confidence in oil cut, OPEC issues quota list
- China said to offer path to end US trade imbalance
- BlackRock, Goldman said to move some fund managers to US if no-deal Brexit
- RBI governor Shaktikanta Das sees inflation assessment as a challenge
- Delhi HC sets aside arbitral award in favour of Reliance subsidiary over Airport Express metro line
- What to expect from Q3 results of IndiGo, SpiceJet, Jet Airways
- Forget privatisation, govt has hugged its banks tighter
- Flat profit, rising debt are growing worries for Reliance
- Q3 results: HUL growth off a high base shows it’s on a roll
- DCB Bank Q3 results: Small loans give big pain as farm, mortgages lift delinquencies