India tightens ecommerce regulations

Thursday 27 December 2018 13:36 CET | News

The Indian government has announced an update to the country’s policy for Foreign Direct Investment (FDI), which will go live on February 1st 2019.

This will ban ecommerce companies – such as Amazon and Walmart-owned Flipkart Group – from selling products from companies in which they have an equity interest. The government also said in a statement that the companies will be prevented from entering into exclusive agreements with sellers.

Currently, ecommerce companies can make bulk purchases through their wholesale units or other group companies that in turn sell the products to other sellers, such as their affiliates or other companies with which they have agreements. Those sellers can then sell the products to other companies or directly to consumers, often at attractively low prices.

However, the new regulations follow complaints from Indian retailers and traders, who say the big ecommerce companies are using their control over inventory from their affiliates, and through exclusive sales agreements, to create an unfair marketplace that allows them to sell some products at very low prices. The new rules state that services provided to vendors on an ecommerce platform – and by that entity’s affiliates – should be done so in a fair and non-discriminatory manner.

According to a statement coming from the Confederation of All India Traders (CAIT), if the order is implemented in full then malpractices, predatory pricing policies, and deep discounting by ecommerce players will no longer occur.

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Keywords: India, ecommerce, indian government, regulations, policy, foreign direct investment, FDI, sellers, retailers, traders, Confederation of All India Traders, CAIT
Countries: World