Flipkart, Amazon Hit as Government Looks to Ban Online Exclusives, Place Other Restrictions

In a declaration, the authorities also stated the businesses will be prevented from entering into private agreements with vendors. The rules will be applicable in February 1.

“An entity with equity participation by e-commerce market entity or its group companies, or using control on its own stock by e-commerce market entity or its group companies, won’t be allowed to market its goods on the stage run by this kind of marketplace thing,” the trade ministry said in a statement.

E-commerce providers can make bulk purchases via their wholesale components or other group businesses that subsequently sell the goods to pick sellers, like their affiliates or other businesses where they have arrangements.

Those vendors may then sell the goods to other businesses or direct to customers, frequently at attractively low prices.

The regulations follow complaints from Indian merchants and dealers, who state the giant e-commerce businesses are using their control over stock in their own affiliates, and via exclusive sales arrangements, to make an unfair market which lets them sell some goods at very reduced rates.

The reception group filed a similar request against Flipkart in May, alleging breach of contest rules during preferential treatment for pick vendors.

Wednesday’s telling also stated that the money back that clients get as a bonus while online shopping shouldn’t be based on if the item was bought from an affiliate of this system or not.

The rules stated that services supplied to sellers on an e-commerce system and from that thing’s affiliates need to be performed so at arm’s length and at a reasonable and non-discriminatory method.

New principles will appease modest farmers and traders who fear U.S. businesses are creating a back door entrance into India’s retail marketplace and may squeeze out little corner stores that dominate Indian retailing.

The Confederation of All India Traders in a statement said that in the event the arrangement is executed in total afterward malpractices, predatory pricing policies and heavy discounting by e-commerce gamers will no more happen.

CAIT secretary general Praveen Khandelwal said the new rules will place an embargo on the strategies adopted by the international players to dominate and control retail commerce in India via e-commerce.

The regulations build on existing rules under which foreign investors may obtain 100% of e-commerce businesses, with the exclusion of a version based on stock from which they’re barred.

Amazon India stated it’s currently assessing the rules, although Flipkart didn’t immediately respond to a request for comment.


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