BENGALURU/BHUBANESWAR: Changes made to e-commerce regulations on Wednesday might see major e-commerce platforms like Walmart-owned Flipkart and Amazon rejig operating models in India. The new rules bar online marketplaces with foreign investors from selling products of firms where they hold stakes and banned exclusive marketing arrangements.
The new norms set to come into effect from February 1 will ensure a level playing field if enforced strictly, said the Confederation Of All India Traders (CAIT). “The cashback sale, discounts, exclusive sales, etc. cannot take place under the new norms. We welcome the government’s decision and believe that it should be implemented strictly,” CAIT secretary general Praveen Khandelwal said, adding that a regulatory authority should be empowered to penalise violators.
Analysts say that e-commerce players will need to make major changes to operating models. “This will impact backend related wholesale Group entities,” noted Rajiv Chugh, EY India. Anil Talreja, partner, Deloitte India however said that discount policy and practices should not be affected by these changes since companies may lose business. “The existing model should be restructured and modified to implement the new structure,” he said.
While Amazon spokespersons say they are still evaluating the circular, Flipkart did not offer any comments. Smaller e-commerce players, however, reacted largely in favour. Shopclues said that this is an “acknowledgement that all the major foreign players have been consistently violating the spirit of the policy from day one”, with CEO and co-founder Sanjay Sethi saying that this “finally closes the back door that has been blatantly exploited”.
Meanwhile, PTI reported legal experts like L Badri Narayanan of Lakshmikumaran & Sridharan, saying that the norms could be contested by foreign firms. These firms, he added, would now have to focus more on consumers than vendors to promote sales.