Indian government tightens rules: E-tailers like Flipkart and Amazon won't be allowed to sell products by companies they back
The government on Wednesday tightened
The online retail firms (e-commerce marketplace entity) are also prohibited from mandating any company to sell its products exclusively on its platform only, as per the revised policy on FDI in e-commerce which comes into effect from February 1, 2019.
"An entity having equity participation by e-commerce marketplace entity or group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity," it said.
The Ministry further said that the online retail firms will not directly or indirectly influence sale price of goods and services and will maintain level playing field.
"Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm's length and in a fair and non-discriminatory manner," it said.
Such services include fulfilment, logistics, warehousing, advertisement, marketing, payments and financing, among others. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory, it said.
"For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory," the statement said.
Further, the online retailers will have to file a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of guidelines by September 30 of every year for the preceding financial year.
The decision comes in the backdrop of several complaints by traditional retail stores alleging heavy discounts by online retailers to consumers are hurting their businesses.