The US-India Strategic Partnership Forum (USISPF) has dubbed the new e-commerce rules as “regressive” and said that the changes would harm consumers, create unpredictability and have a negative impact on the growth of online retail in India.
The Forum asserted that “it is not the government’s business to micromanage businesses” and alleged that the amendments announced came out without any consultation and are akin to changing rules in the middle of the game.
Earlier this week, the government appeared to have yielded to demands of domestic traders and put in place new norms, which would end discounts and cashback offers that online platforms with foreign investment were offering. The new rules are set to come into effect from February 2019.
“The amendment to the FDI in e-commerce policy is regressive. It harms the consumer, who is ultimately the king in any retail environment. It is not the government’s business to micromanage businesses. This amendment bars Indian manufacturers and sellers from effectively competing in the global online marketplace,” USISPF President and Chief Executive Officer (FPO) Mukesh Aghi said in a statement.
He further stated that the amendment “highlights the lack of transparency in policy making and creates unpredictability”.
With about a month to comply, American retailer Walmart-backed Flipkart and US-based Amazon — the two largest players in the Indian e-commerce sector — would be hit the hardest.
Smaller traders have, in the past, cried foul alleging that preferential treatment was given to certain sellers that are affiliates of these larger online marketplaces. This, they said, created an unfair marketplace.
The new rules, announced on December 26, bar online platforms from selling products supplied by affiliated companies, and from offering customers special discounts. For retailers such as Walmart, the new rules may hinder selling products under their own private brands.
The new rules clamp down on exclusive deals; this could cast a cloud on partnerships seen in the past including those with electronic and smartphone brands like ASUS, OnePlus, BPL and others.
However, smaller players such as ShopClues and Snapdeal have welcomed the move, saying the development will “close the back door” that has been “blatantly exploited” by larger companies and provide a