Fitch Solutions on Friday said international e-commerce firms in India face the risk of increasingly coming under pressure in the current year due to key policy changes and Reliance Retail venturing into the digital market space. While an e-commerce policy is still in the works, it is likely to take effect in March, Fitch Solutions said in a statement.
In addition to the earlier draft guidelines, which ban global online retailers from selling products from companies or affiliates in which they own an equity interest, the government is examining the possibility to set up a regulatory authority to resolve disputes between large online retailers and small enterprises in the country.
“Despite continued investment, our view is that international e-commerce players (including Amazon India and Flipkart) face the risk of increasingly coming under pressure in 2020 due to key policy changes and Reliance Retail entering the digital market space with new e-commerce platform JioMart, in January 2020,” it said.
Smaller retailers have been claiming that companies such as Amazon India and Flipkart are pricing them out of the market. “Under the new policy, international e-commerce companies in India would be banned from influencing pricing, employing unfair promotional activities, as well as misrepresenting the quality or features of their product offering,” Fitch Solutions said.
E-commerce players will also be compelled to store generated data on servers in India. This would put an additional burden on international players, which will be urged to establish local centres for the collection and storage of their data.
Fitch Solutions further said that the days for deep price promotions on online platforms are likely to be numbered in India. “In addition, we project a significant acceleration of online purchases of food and drink products in 2020 and the remainder of our medium term forecast to 2023,” it added.