The US-India Business Council (USIBC), a lobby group for the United States Chamber of Commerce, said India’s proposed changes to e-commerce rules will be cause for concern and result in a tough operating environment for businesses. Reuters reported.
The Indian Ministry of Consumers proposed changes on Monday that will give the existing consumer protection (e-commerce) regulations more teeth for 2020. The proposed changes include new rules against the abuse of FDI regulations, the establishment of a complaint procedure, new display and labeling criteria for foreign goods, the ban on flash sales and data protection for customers.
USIBC, which includes Amazon and Walmart, described the rules as relating to and in line with India’s stance toward other major digital companies, Reuters reported based on internal emails it reviewed.
Will discourage platforms from owning providers: USIBC found that India’s proposals “discourage (e-commerce) platforms from owning vendors,” the report said. The Government of India’s Foreign Direct Investment (FDI) policy states that e-commerce companies with FDI such as Amazon and Flipkart owned by Walmart can only act as third-party marketplaces and cannot operate an inventory-based model where they sell directly to customers to sell. But brick-and-mortar retailers have accused Amazon and Flipkart of circumventing this by building complex ownership structures and giving preference to a select group of sellers who are indirectly owned or controlled by them. Reuters in February reported that thirty-five sellers, including Cloudtail, accounted for two-thirds of Amazon’s sales in India.
Significant sales restrictions: The email also stated that the proposed changes “include several relevant policies, including significant restrictions on the platforms’ ability to organize sales and handle complaints,” the report added. The draft regulation prohibits flash sales, which are defined as sales made “by an e-commerce company at significantly reduced prices, high discounts or other such promotions or attractive offers for a predetermined period of time on selected goods and services or in any other way an intention to attract a large number of consumers “, provided that such sales are organized,” with the intention of only one particular seller or group of sellers managed by such an enterprise to sell goods or services on its To enable platform “. This could potentially prevent Amazon from running its Prime Day sales or lightning deals and Walmart’s Flipkart running its Big Billion Days.
Similar to the rules for social media platforms: Some of the rules are similar to those that “apply to social and digital media companies … leading to a stricter e-commerce regime,” Reuters told USIBC. Similar to the complaint mechanism set out in the IT Rules (IT) 2021 for social media intermediaries, the proposed changes to the e-commerce rules will require platforms to appoint Indian residents to the following roles: Chief Compliance Officer , Node contact person and local complaints officer.