‘Will lead to losses, change business models’: major e-commerce players object to govt’s new rules

A major sticking point between the government and the companies is a clause asking them not to have their own enterprises as sellers on their e-commerce platforms.

The new e-commerce rules formulated by the Modi government are facing opposition from major e-commerce players in India like Amazon and Tata who say that implementing them would affect their business models, according to a report by Reuters. Concerns were expressed by the officials of these companies in a meeting with the Consumer Affairs Ministry and state-run investment promotion agency Invest India on Saturday.

Notably, the government had released the new rules governing e-commerce on June 21 with the aim to enhance consumer protection. Some provisions of the rules include- restrictions on flash sales, banning misleading advertisements and establishing complaint mechanisms.

A major sticking point between the government and the companies is a clause asking them not to have their own enterprises as sellers on their e-commerce platforms. The clause could force Amazon and Flipkart to change their business structures. Amazon has acquired some stake in two sellers on its platform- Cloudtail and Appario. A Tata executive also reportedly expressed objection to the specific clause, arguing that it could lead to losses for many of the conglomerate’s private brands including Starbucks.

Amazon highlighted the adverse effect the pandemic had on its small sellers and said that the new rules would have a big impact on them, sources told Reuters. The new rules are likely to increase the operating costs for many e-commerce sellers including Jiomart, Snapdeal and Big Basket.

However, the Consumer Affairs Ministry defended the rules at the meeting, arguing that they were less strict as compared to other countries and would increase the protection for consumers.

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