Amazon, Flipkart to team up against govt's decision to bar deep discounting, cashbacks

Amazon and Flipkart are planning to form a united front taking help of industry bodies such as CII and FICCI to hold talks with the Ministry of Commerce over the e-commerce draft policy.

Even some leading global investment firms are also said to be a part of this front. (Images: AFP/ PTI)

E-commerce Draft Policy: Days after the government announced amendments in e-commerce draft policy restricting online sellers from offering heavy discounts and other changes in selling policy, leading online firms such as Amazon and Flipkart are now planning to have a dialogue with the government over the issue. It is being learnt that both the e-commerce companies are planning to form a united front and are taking help of industry bodies such as Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (FICCI) to hold talks with the Ministry of Commerce. Even some leading global investment firms which have major stakes in these e-commerce giants are also said to be a part of this front. According to a report by Business Standards, industry experts believe that there is enormous concern over government’s decision as it could make it tough for Amazon, Flipkart and other e-commerce firms to continue business in India. It is also being said that if the government implements the aforementioned alteration in the policy - which put a stop to flash sales and bar online marketplaces to sell via vendor firms they have stakes in – the e-commerce firms would have to revamp the model and how they function in the country. These companies are also in constant touch with the industry bodies before approaching the government as it would make the dialogue much smoother. The report also quoted industry experts as saying that even brick-and-mortar retailers have private labelled products and as it is a legitimate business practice there is no reason to single out e-commerce firms. These companies believe that changes in private label policy and cut down in the amount of business they do in the segment would also affect the number of direct and indirect jobs they provide. The companies will also need to rethink about the expansion plans in the country. Even some of the investing firms have written to Niti Aayog and Ministry of Finance asking them to keep in mind the interest of investors and other stakeholders while amending the e-commerce draft policy. Government had last week announced some major alteration in the policy of online selling of goods and services in the country. The commerce and industry ministry has barred e-commerce companies from selling products of the firms in which they hold stakes. Making the road even tougher, the ministry has also restricted online sellers from entering into an agreement for the exclusive sale of products. This means that smartphone brands such as Mi will not be able to sell its phones exclusive on Flipkart, a method adopted by tech firms at the time of a product launched. The government has also put some restrictions on deep discounting and cashback schemes which is touted to be one of the most significant ways for e-commerce firms to lure customers. These changes in the e-commerce policy will be effective from February 1, 2019.