Amazon, Flipkart face local resistance: Indian retailers oppose extension of e-commerce rule deadline

Updated: January 29, 2019 7:02:41 AM

The size of India's e-commerce industry currently stands at $18 billion- $20 billion, an analyst at EY noted.

The government also directed e-commerce firms to dissuade from influencing sale price of goods and maintain a level playing field.

By Asmita Dey  

Trade delegations led by the Confederation of All India Traders (CAIT), on Monday met top officials of the commerce ministry and urged them not to extend the February 1 deadline for implementing the
new guidelines for foreign direct investment (FDI) in e-commerce.

Walmart and Amazon are understood to have met NITI Aayog CEO Amitabh Kant on the sidelines of the World Economic Forum in Davos on the issue, sources familiar with the development said. “Traders met with the government to try and make sure the government does not give in to big e-commerce companies,” they told FE.

Amazon and Walmart are understood to have written letters to the government asking it to extend the February 1 deadline, sources said. The government is further considering traders’ demand for setting up an e-commerce regulator, they added.

The CAIT has repeatedly requested the government not to defer the deadline. Beginning February 1, the traders’ association will launch a national campaign to establish the importance of trading community in the polls. India has about seven crore small businesses providing livelihood and employment to around 45 crore people, generating an annual business of about `42 lakh crore, the CAIT said. Last week, it also sent a memorandum to the Prime Minister’s office (PMO) requesting him to direct the commerce ministry to not extend or defer the deadline.

The PMO is understood to have directed the ministry to examine the matter on a priority basis, sources said. “Today’s meeting will give traders a sense of what the government is actually thinking on the two issues of setting up a regulator and extending the deadline,” they added.

Last month, the government reviewed FDI policy in e-commerce that places stringent restrictions on e-commerce companies. It bars marketplace entities from selling any product exclusively on its platform, and curbs an entity having equity participation by e-commerce marketplace or its group companies from selling its products on the platform run by online marketplaces. The government also directed e-commerce firms to dissuade from influencing sale price of goods and maintain a level playing field.
“Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies,” the press note issued by the Department of Industrial Policy & Promotion said.

Amazon and Flipkart make almost 60%-70% of their sales from their subsidiaries, analysts say.
Analysts at financial services firm Jefferies said the government’s revised notification on FDI in e-commerce might hurt e-tailers and will at least be an overhang till more clarity emerges.
The size of India’s e-commerce industry currently stands at $18 billion- $20 billion, an analyst at EY noted.

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