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

Photo: Christian Wiediger/unsplash

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 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 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 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.
Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.