Amazon and India’s Tata Group warned government officials on Saturday that plans for tougher rules for online retailers would have a major affect on their commerce models, four sources familiar with the discussions told Reuters.
At a assembly organised by the consumer matters ministry and the government’s investment promotion arm, Invest India, many executives expressed concerns and confusion over the proposed rules and asked that the July 6 deadline for submitting comments be extended, said the sources.
The government’s hard new e-commerce rules announced on June 21 aimed at strengthening protection for consumers, caused concern a number of the country’s online retailers, notably market leaders Amazon and Walmart’s Flipkart.
New rules limiting flash sales, barring deceptive advertisements and mandating a complaints system, among other proposals, could force the likes of Amazon and Flipkart to review their commerce 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 enormous affect on its sellers, arguing that some clauses were already covered by existing law, two of the sources said.
The sources asked not to be named as the discussions were private.
The proposed policy states e-commerce firms should ensure none of their related enterprises are listed as sellers on their websites. That could affect Amazon in specific as it holds an oblique stake in a minimum of two of its sellers, Cloudtail and Appario.
On that proposed clause, a representative of Tata Sons, the holding company of India’s $100 billion (kind of Rs. 7,45,280 crores) Tata Group, argued that it was once 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.
The Tata executive said the rules will have wide ramifications for the conglomerate, and could restrict sales of its private brands, according to two of the sources.
Tata declined to remark.
The sources said that a consumer ministry official argued that the rules were meant to offer protection to consumers and were not as strict as those of other countries. The ministry did not respond to a request for remark.
A Reliance executive agreed that the proposed rules would boost consumer confidence, but added that some clauses needed clarification.
Reliance did not respond to request for remark.
© Thomson Reuters 2021