India will ban e-commerce groups including and -owned Flipkart Group from promoting merchandise from groups in which they have an fairness interest.
In a assertion, the government additionally stated that the corporations might be prevented from entering into different agreements with dealers. The new guidelines might be relevant from February 1.
“An entity having fairness participation through e-trade marketplace entity or its organization corporations, or having manage on its inventory by e-commerce market entity or its institution corporations, will not be accepted to sell its merchandise at the platform run via such marketplace entity,” the trade ministry said in a statement.
E-commerce groups can make bulk purchases thru their wholesale units or different group agencies that in flip sell the goods to pick out dealers, together with their associates or other companies with which they have agreements.
Those sellers can then sell the products to other organizations or direct to purchasers, often at attractively low prices.
The new regulations observe court cases from Indian outlets and buyers, who say the massive e-commerce groups are the use of their manage over stock from their affiliates, and through unique income agreements, to create an unfair marketplace that permits them to sell some products at very low costs.
The All India Online Vendors Association (AIOVA) in October filed a petition with the anti-believe body Competition Commission of India (CCI) alleging that Amazon favours merchants that it partly owns, which include Cloudtail and Appario. The lobby institution filed a similar petition towards Flipkart in May, alleging violation of opposition regulations thru preferential treatment for select sellers.
Wednesday‘s notification also said that the coins returned that clients get as an incentive while online shopping should no longer be based on whether or not the product changed into purchased from an associate of the platform or now not.
The new policies stated that offerings supplied to vendors on an e-commerce platform and through that entity‘s associates ought to be executed so at arm‘s duration and in a honest and non-discriminatory manner.
New policies will appease small buyers and farmers who fear that U.S. Agencies are creating a again door entry into India‘s retail market and could squeeze out small nook shops that dominate Indian retailing.
The Confederation of All India Traders in a statement said that if the order is implemented in complete then malpractices, predatory pricing regulations and deep discounting by means of e-trade gamers will not arise.
CAIT secretary wellknown Praveen Khandelwal stated the new guidelines will positioned an embargo on the tactics adopted by way of the global gamers to govern and dominate retail alternate in India through e-commerce.
In May, CAIT had raised objections to Walmart‘s $16 billion acquisition of Flipkart saying the deal would create unfair opposition and bring about predatory pricing.
The new guidelines construct on present regulations below which foreign investors can acquire one hundred percentage of e-commerce organizations, except a model based totally on stock from which they’re barred.
Amazon India stated it’s miles presently comparing the new regulations, while Flipkart did now not right away respond to a request for comment. (Writing by way of Nidhi Verma; Editing by means of Martin Howell)