Amazon, Flipkart and other e-commerce platforms may not be able to do flash sales any more, if Indian government has its way
- The latest regulations are an amendment to the Consumer Protection (E-Commerce) Rules of 2020.
- All e-commerce entities will have to appoint a compliance officer, grievance officer and a nodal contact person.
- CCI is also looking to launch an antitrust probe in the business practices of both Amazon and Flipkart.
The government of India has decided to revise the e-commerce regulations, as offline retailers in the country continue to be dissatisfied with predatory practices of the e-commerce giants like Amazon and Flipkart.
According to the new draft regulations by the Ministry of Consumer Affairs, Food and Public Distribution, e-commerce entities might be prohibited from hosting flash sales.
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The department of consumer affairs, in the amended policy, defines flash sales as “sale organised by an e-commerce entity at significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time on selective goods and services or otherwise with an intent to draw large number of consumers”
Notably, organisations like Confederation of All India Traders (CAIT) have previously accused Amazon and Flipkart of giving deep discounts and eating into their businesses.
The latest amendments to the Consumer Protection (E-Commerce) Rules of 2020 also bar e-commerce entities from displaying or promoting any misleading advertisements, whether in the course of business on its platform or otherwise. The ministry released the draft on Monday, June 21.
Just like the Consumer Protection Act of 2019, which came into force in July last year, the latest amendments aim to smoothen the grievance redressal process on e-marketplaces. Each e-commerce platform will have to establish an adequate grievance redressal mechanism.
These platforms, including Amazon and Flipkart, will also have to appoint a Chief Compliance Officer, a Resident Grievance Officer and a nodal contact person in India.
The e-commerce rules are a combination of the Consumer Protection Act of 2019, Indian Exchange Control Laws (IEC Regulations) and the Information Technology Act of 2000. These guidelines have been set in place to ensure fair play in technology and a data-driven e-commerce environment.
|New draft e-commerce policy proposes new appointments|
|Chief Compliance Officer||Ensuring compliance with the Indian rules and Acts|
|Resident Grievance Officer||Ensuring redressal of grievances|
|Nodal Contact Person||Ensuring coordination with law enforcement agencies and officers|
The latest amendment to the Consumer Protection (E-Commerce) Rules of 2020 also states:
- All e-commerce entities should be registered with the department for promotion of industry and internal trade (DPIIT).
- E-commerce entities should provide information within 72 hours of receiving an order from a government agency.
- E-commerce entities are barred from manipulating search results and cross selling of products.
Praveen Khandelwal, CAIT’s secretary general, believes that the latest guidelines will purify the e-commerce landscape of the country, “which has been greatly vitiated by various e-commerce global companies to the extent that not only the domestic trade has been damaged, but even the consumers are also feeling the heat of their unethical business practices.”
The lobby group has once again accused the foreign funded e-commerce companies like Amazon and Walmart-owned Flipkart of violating India’s foreign direct investment (FDI) policy. Previously, CAIT and All India Online Vendors Association (AIOVA) have accused these e-commerce giants of flouting Foreign Exchange Management Act (FEMA) rules and devoiding the government of goods and services tax (GST) with their deep discounting policy.
The accusation made by lobby groups, along with a few media reports, have put e-commerce entities especially Amazon and Flipkart on a tough spot with the Indian government. Not only is the central government scrutinising their actions, but is also looking to amend India’s FDI policy to create a level playing field for local players.
The FDI policies for e-commerce prohibit foreign funded e-commerce companies from selling products of the retailers they have a majority stake in, giving preferential treatment to certain sellers and having a control of their inventory. However, the deep discounting practices did raise questions about Amazon’s and Flipkart’s control over its inventory and pricing policies.
In addition, India’s competition watchdog Competition Commission of India (CCI) is planning to launch an antitrust probe into Amazon’s and Flipkart’s business practices. The antitrust investigation would look into the alleged policy violations and anti-competitive behaviours of both the companies.
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