As the February deadline to comply with India’s new eCommerce regulations draws nearer, online marketplaces like Flipkart and Amazon India has assured sellers that it will be business, as usual, barring a minor blip.
Walmart-owned Flipkart has told the Indian Government that the downtime will be to streamline technical issues; Amazon India maintained there would be minor disruption to its sellers. Sources said that Amazon and Walmart had written letters to the government asking it to extend the February 1 deadline. They added that the government is further considering traders’ demand for setting up an eCommerce regulator.
While online giants like Amazon and Flipkart are not happy with the move, the offline trading community has welcomed it. Last year, Walmart invested $16 billion in buying 77 percent shares of Flipkart. The government seems to consider extending the deadline to February 1. It quoted an anonymous senior official as saying that “the government is considering giving an extension, but no final decision has been taken.”
Last month, the government reviewed the FDI policy in eCommerce that places stringent restrictions on eCommerce companies. It bars marketplace entities from selling any product exclusively on its platform and curbs an entity having equity participation by eCommerce marketplace or its group companies from selling its products on the platform run by online marketplaces. The government also directed eCommerce firms to dissuade from influencing the sale price of goods and maintain a level playing field.
A marketplace eCommerce company is one that does not own goods and services but acts as a mediator between seller and buyer. Companies like Amazon and Flipkart fall into this category. A hundred percent FDI is allowed in marketplace eCommerce companies.
The new eCommerce rule bans companies from selling products via firms in which they have an equity interest. The new guidelines also say that an eCommerce marketplace entity like Amazon cannot mandate any seller to sell any product exclusively on its platform.
The new rules were issued because marketplace eCommerce companies were acting like inventory-based eCommerce companies, where no FDI is allowed.