No more heavy discounts, exclusive deals by Amazon, Flipkart, others - What customers need to know

The government on Wednesday announced some major alteration in the policy of online selling of goods and services in the country.

These changes in the e-commerce policy will be effective from February 1, 2019. (Image: AFP)

E-commerce draft policy: In a massive setback to e-commerce companies such as Flipkart, Amazon and others, the government on Wednesday announced some major alteration in the policy of online selling of goods and services in the country. The commerce and industry ministry has also barred such 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 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. “An entity having equity participation by e-commerce marketplace entity or its 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,” news agency PTI quoted the ministry as saying. Reports have also emerged that the government has also put some restrictions on deep discounting and cashback schemes which is touted to be one of the most significant way for e-commerce firms to lure customers. These alterations in the e-commerce policy came in the backdrop of the regular complaints filed by the brick-and-mortar (offline) retailers citing absence of a level-playing field in the sector. Speaking to ABP Live, Rajiv Chugh, National Leader, Policy Advisory & Speciality Services, EY India, said, “E-commerce players need to relook there operating strategy in India on account of the new rule on cap on their equity participation by them in its suppliers entities. Going forward, the suppliers will not be permitted to sell their products on the platform run by such marketplace entity. This will impact backend related wholesale Group entities and need to remove them from the e-commerce value chain. Time has come to look at franchise channels, rather than equity investments channels to do business in India.” Welcoming the move, Snapdeal CEO Kunal Bahl tweeted that “Marketplaces are meant for genuine, independent sellers, many of whom are MSMEs. These changes will enable a level playing field for all sellers, helping them leverage the reach of e-commerce.” “Cashback provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory,” the ministry’s notification said. It further said that these companies will have to file a certificate along with a report of statutory auditor to the RBI, confirming compliance of guidelines by September 30th of every year for the preceding fiscal. These changes in the e-commerce policy will be effective from February 1, 2019. Also, changes to applicable to all segments of e-commerce including retail, logistics, warehousing, advertisement, marketing, payments, financing and others. "In a country where majority of the sales are still driven by brick and mortar retail stores, the government’s announcement shows that it has studied the e-commerce business model in detail and suggested systematic provisions to be taken to ensure a more level playing field going forward and allowing fair competition between the different retail channels," Rakesh Dugar, CMD, Mitashi Edutainment told ABP Live. The ministry also ordered that online companies will now have to file a certificate along with a report of statutory auditor to the Reserve Bank of India (RBI), confirming compliance of guidelines by September 30th of every year for the preceding fiscal.