Finance
By: Shree1news, 04 JUL 2021
Amazon.com Inc and Tata Group warned government officials on Saturday that plans for tougher guidelines for online retailers would have a significant affect on their business models, 4 sources familiar with the discussions told.
At a meeting organised by the Consumer Affairs Ministry and the Government’s investment promotion arm, Invest India, many executives expressed concerns and confusion over the proposed guidelines and asked that the July 6 deadline for submitting comments be extended, stated the sources.
The Government’s tough new e-commerce guidelines announced on June 21 aimed at strengthening safety for consumers, caused concern among the country’s online retailers, notably market leaders Amazon and Walmart Inc’s Flipkart.
New guidelines limiting flash sales, barring misleading advertisements and mandating a complaints system, among other proposals, could force the likes of Amazon and Flipkart to review their business structures, and will enhance costs for domestic rivals including Reliance Industries’ JioMart, BigBasket and Snapdeal.
Amazon argued that COVID-19 had already hit small businesses and the proposed rules will have a big impact on its sellers, arguing that some clauses were already covered by existing law, two of the sources stated.
The sources asked not to be named because the discussions were private.
The proposed policy states e-commerce firms should ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular because it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.
On that proposed clause, a representative of Tata Sons, the holding company of Tata Group, argued that it was problematic, citing an example to say it would stop Starbucks – which has a joint-venture with Tata in India – from offering its products on Tata’s marketplace website.
The Tata executive stated the rules will have broad ramifications for the conglomerate, and will prohibit sales of its private brands, based on two of the sources.
Tata declined to comment.
The sources stated {that a} consumer ministry official argued that the rules have been meant to protect consumers and weren’t as strict as those of other nations. The ministry didn’t respond to a request for comment.
A Reliance executive agreed that the proposed guidelines would enhance consumer confidence, however added that some clauses needed clarification.
Reliance didn’t respond to request for comment.
The rules were announced last month amid growing complaints from India’s brick-and-mortar retailers that Amazon and Flipkart bypass foreign investment law utilizing complex business structures. The companies deny any wrongdoing.
A investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers and bypassed foreign investment rules. Amazon has stated it does not give favourable treatment to any seller.
The Government will soon issue certain clarifications on the foreign investment guidelines, Commerce Minister Piyush Goyal informed reporters on Friday.
Source:A-N
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