India’s e-commerce policy is still in the works – with Flipkart, Amazon on tenterhooks

  • The Indian e-commerce industry is grow to $200 billion by 2026.
  • The National e-commerce policy earlier had a deadline of being introduced by the end of 2019.
  • A recently released consumer protection draft is waiting for comments from leaders.
  • The draft e-commerce policy spelt trouble for Flipkart, Amazon.
Indian e-commerce is growing at a fast rate as it moves to reach out to Bharat – the next 200 million internet users in the country. But not all is completely well with this industry which is expected to grow to $200 billion by 2026.

From deep discounting to FDI in e-commerce to data protection, there are several concerns that the industry and its consumers have to deal with. Yet, considering the speedy growth of the industry, the Indian government is all set to regulate the sector.

It is planning to bring about a National e-commerce policy. A draft policy was introduced in February and recently yet another draft on consumer protection in e-commerce also came in. The government is engaging with industry leaders to include their thoughts in the final policy.

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The draft e-commerce policy itself opened debate as Walmart-owned Flipkart, Amazon came directly under the government’s line of fire.

The draft has not yet been converted into a bill and hence will not be tabled at the winter session of the parliament. However, there could be an overlap with the data protection bill that is a part of the session.

The National e-commerce policy was supposed to be introduced by the end of 2019.

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A recently released consumer protection draft is waiting for comments from leaders

The government on November 11 released a draft consumer protection in e-commerce rules. It has been opened up to the public so that e-commerce industry leaders can give their comments on it by December 2, 2019.

The draft once again emphasised that e-commerce players cannot directly or indirectly influence the price of the goods or services and must maintain a level playing field. They also cannot falsely represent themselves as consumers or post reviews on their behalf.

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It also says that every e-commerce player will have to “publish on its website the name of the Grievance Officer and his contact details as well as mechanism by which users can notify their complaints about products and services availed through their web site”.

The draft e-commerce policy spelt trouble for Flipkart, Amazon

Introduced in February 2019, the draft policy had already gone through multiple rounds of deliberations.

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While homegrown players like Snapdeal, Paytm Mall have more or less found a safe place in the policy, Flipkart, Amazon and Chinese retailers like Club Factory, Shein are in a tough spot.

As the draft, FDI in e-commerce will only be allowed for the marketplace model and not for inventory-based selling. This means that Flipkart and Amazon, will not be allowed to own or sell through any of their entities.

Through several meetings over the year, the government has made its intentions clear. In a recent closed door meeting with industry players, Commerce and Industry Minister Piyush Goyal also told Amazon and Flipkart that they must ensure compliance with new foreign investment rules and steer clear of deep discounting.

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Chinese retailers too will find it difficult to function without having an Indian entity. The policy says that all product shipments from other countries to India must be channelized through customs..

One of the major problems in the e-commerce sector, deep discounting or predatory pricing will be looked into as well. Anti-counterfeiting measures will be taken to curb the growing menace of fake products. Another important point of the policy is the government's insistence that all local data should be stored in India.
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