NEW DELHI: According to four sources involved with the discussions, Amazon.com Inc and India’s Tata Group cautioned government officials on Saturday that plans for harsher rules for online retailers would have a significant impact on their business models. Many executives expressed concerns and misunderstanding about the new guidelines during a meeting organized by the consumer affairs ministry and the government’s investment promotion arm, Invest India, and urged that the July 6 deadline for submitting comments be extended, according to the sources.
The government’s strict new e-commerce rules, which went into effect on June 21 and are aimed at improving consumer protection, have alarmed the country’s online retailers, particularly market leaders Amazon and Walmart Inc’s Flipkart.
New rules limiting flash sales, prohibiting misleading advertisements, and requiring a complaints system, among other proposals, could force Amazon and Flipkart to rethink their business models, potentially raising costs for domestic competitors such as Reliance Industries’ JioMart, BigBasket, and Snapdeal.
According to two sources, Amazon contended that COVID-19 had already impacted small businesses and that the proposed rules will have a significant impact on its sellers, noting that several terms were already covered by existing legislation.
Because the discussions were private, the sources requested anonymity.
According to the proposed guideline, e-commerce companies must verify that none of their affiliated businesses are featured as merchants on their platforms. Because Amazon owns an indirect ownership in at least two of its sellers, Cloudtail and Appario, this could have an impact on Amazon. A representative of Tata Sons, the holding company of India’s $100 billion Tata Group, claimed that the proposed condition was problematic, providing an example in which it would prevent Starbucks, which has a joint venture with Tata in India, from selling its products on Tata’s marketplace website. According to two sources, the Tata executive stated that the restrictions will have broad implications for the group and may restrict sales of its private brands. Tata did not respond to a request for comment.
According to the sources, a consumer ministry official argued that the laws were designed to safeguard consumers and were less stringent than those in other nations. A request for comment was not returned by the ministry. The proposed rules, according to a Reliance official, will increase consumer confidence, but several clauses need to be clarified. A request for comment from Reliance was not returned. The measures were introduced last month in response to mounting complaints from India’s brick-and-mortar shops that Amazon and Flipkart use complex business structures to circumvent foreign investment laws. The businesses deny any misconduct on their part. Amazon records were mentioned in a February Reuters investigation https://www.reuters.com/investigates/special-report/amazon-india-operation that indicated it granted preferential treatment to a limited number of its merchants and circumvented foreign investment restrictions. Amazon has said that no merchant receives preferential treatment. Indian commerce minister Piyush Goyal told reporters on Friday that the government will offer clarifications on foreign investment laws soon. (New Delhi-based reporter Aditya Kalra contributed to this report; Euan Rocha and Louise Heavens edited it.)/n
