India’s new e-commerce sector could be highly disruptive for some of the country’s biggest online shopping websites, including U.S based Amazon and Walmart’s Flipkart.
On Monday, India’s Ministry of Consumer Affairs outlined plans which include limiting “flash sales” by online retailers, reigning in a private label push, compelling them to appoint compliance officers and impose a “fall-back liability” if a seller is negligent.
“The rules will have a wider impact on all forms of e-commerce and will increase business costs. Entities, even beyond big players, are analysing the policy and will share concerns with the government,” Arjun Sinha, a partner at Indian law firm AP & Partners, told Reuters.
The new rules are expected to have an impact across the board in an e-retail market India forecasts will be worth $200 billion by 2026, with players including from Tata’s BigBasket, Reliance Industries’ JioMart and Softbank-backed Snapdeal to market leaders Amazon and Flipkart.
These new draft rules are a more stringent version of the earlier version released in 2020 by then consumer affairs minister Ram Vilas Paswan.
It requires the platforms to identify goods based on their country of origin, provide suggestions of alternatives among domestically manufactured goods and ensure the ranking doesn’t discriminate against domestic goods.
Indian retailers allege that Amazon and Flipkart use their wholesale units to indirectly list products on their websites through select sellers, bypassing foreign investment restrictions that prohibit direct sales.Both companies deny any wrongdoing.
“The Consumer Affairs ministry has nothing to do with issues brought under these rules,” one e-commerce executive said.
Amazon said in a statement that online marketplaces promote competition and enable transparency, adding that it was reviewing the draft policy and it was too early to comment.
Flipkart did not respond to a request for comment.
