Online retailers including representatives from Amazon and Tata met government officials to raise concerns about tough new rules for e-commerce announced last month that were seen as a major blow for their business models, sources told NDTV on Saturday.
At a meeting earlier in the day, executives from the companies told the department of consumer affairs that they were worried about the proposed rules and asked that the July 6 deadline for submitting comments be extended, said the sources.
Key issues raised included the restrictions on flash sales, definition of related parties and compliance of norms for e-commerce majors, they said, adding that the government officials asked for written feedback on the rules.
The government’s tough new e-commerce rules announced on June 21 aimed at strengthening protection for consumers and small retailers, were met with concern among the country’s online sellers, especially market leaders Amazon and Flipkart.
New rules 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 may increase 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 huge impact on its sellers, arguing that some clauses were already covered by existing law, news agency Reuters reported citing sources who asked not to be named as the discussions were private.
The proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular as it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.
On that proposed clause, a representative of Tata Sons 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, Reuters reported.
The Tata executive said the rules will have wide ramifications for the conglomerate and could restrict sales of its private brands, sources told Reuters. Tata declined to comment.
The sources said that a consumer ministry official argued that the rules were meant to protect consumers and were not as strict as those of other countries. The ministry did not respond to a request for comment.
A Reliance executive told Reuters that the proposed rules would boost consumer confidence, but added that some clauses needed clarification. Reliance did not 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 using complex business structures. The companies deny any wrongdoing.
Reuters had reported in February that Amazon documents that showed it gave preferential treatment to a small number of its sellers and bypassed foreign investment rules. Amazon has said it does not give favourable treatment to any seller.
The government will soon issue certain clarifications on the foreign investment rules, commerce minister Piyush Goyal told reporters on Friday, accusing large online retailers of “arrogance” and of flouting laws by indulging in predatory pricing practices.
(With inputs from Reuters)