India proposed banning flash sales on e-commerce websites and said on Monday their affiliate entities should not be listed as sellers on their platforms, in a proposed tightening of rules that could hit Amazon and Walmart's Flipkart.
The Ministry of Consumer Affairs' rules, which were released in a government statement, come amid complaints by brick-and-mortar retailers that foreign e-commerce players bypass Indian laws by using complex business structures.
Amazon and Flipkart say they comply with all Indian laws. Amazon said on Monday it was reviewing the draft rules and had no immediate comment, while Walmart's Flipkart did not respond to a Reuters request for comment.
Under the stricter proposals, e-commerce companies should not hold flash sales in India. These are hugely popular during festive season, but have faced anger among offline sellers who say they cannot compete with the deep discounts online.
E-commerce firms must also ensure that none of their "related parties and associated enterprises" are listed as sellers on their shopping websites, and no related entity should sell goods to an online seller operating on the same platform.
The changes could impact business structures used by Flipkart and Amazon in the fast growing Indian e-commerce market, industry sources and lawyers said.
The proposal, which is applicable to both Indian and foreign players, is open for public consultation until July 6, the Indian government statement said.
The rules also call on companies to make suggestions of alternative products before customers make purchases "to ensure a fair opportunity for domestic goods."
"This proposal basically changes the way e-commerce is structured. This is way beyond consumer rules - this is basically like an e-commerce industry policy," one e-commerce executive said, adding: "It will be extremely disruptive."
Amazon and Flipkart are separately locked in a court battle with federal antitrust watchdog to stall an investigation into their business practices.
Source: https://www.reuters.com/world/india/india-plans-tighter-e-commerce-rules-amid-complaints-over-amazon-flipkart-2021-06-21/
