Indian Online Companies Welcomes New e-Commerce Norms in India

The government’s move to ghten norms for online marketplaces with foreign investment will close the “back door” that has been “blatantly exploited” by such
companies and provide a level-playing field, industry players said. The changes will mostly affect US-based and Walmart-backed Flipkart — the two largest players in the burgeoning Indian e-commerce sector — as one of the norms bars striking exclusive markeng arrangements that could influence product prices.

“It (introducon of the new norms) is an acknowledgment that all the major foreign players have been consistently violang the spirit of the policy from day one. Almost all the clarificaon points menoned in this policy can be directly aributed to an acve violaon by these foreign players,” CEO and cofounder Sanjay Sethi said. He added that the clarificaon will “finally close the back door that has been blatantly exploited by these players”.

Snapdeal too has lauded the move, with founder and CEO Kunal Bahl saying these changes will enable a level-playing field for all sellers and help them leverage the reach of e-commerce.

While Flipkart has not commented on the changes, Amazon has said it is evaluang the circular.

The new norms — effecve February — will also bar online marketplaces from selling products of companies in which they hold a stake. This could potenally
impact many electronic and smartphone brands like ASUS, OnePlus, BPL and others that work exclusively with either of the two giants. The new guidelines will
also make it difficult for players with FDI investments to offer discounts and cashbacks to online shoppers, a development that industry watchers say will affect business models of these companies.

The new rules could also pull the plug on seller enes like Cloudtail and Appario (that have equity investment from e-commerce companies).

“There are some specific points that need greater clarity, especially the fact that an enty having ‘equity parcipaon’ by e-commerce market place enty or its
group company, is not permied to sell its products on the plaorm run by marketplace enty,” said Darshan Upadhyay, partner at Economic Laws Pracce,
adding that this could result in all vendors and suppliers where the marketplace enty (or its group) have insignificant holding being ineligible for selling their
products.

The new rules could also pull the plug on seller enes like Cloudtail and Appario (that have equity investment from e-commerce companies).

“There are some specific points that need greater clarity, especially the fact that an enty having ‘equity parcipaon’ by e-commerce market place enty or its group company, is not permied to sell its products on the plaorm run by marketplace enty,” said Darshan Upadhyay, partner at Economic Laws Pracce, adding that this could result in all vendors and suppliers where the marketplace enty (or its group) have insignificant holding being ineligible for selling their products.

Instamojo CEO and co-founder Sampad Swain said while the earlier regulaons were bound by high caps, MSMEs of the country would now get a fair opportunity to come and parcipate in the digital economy. “This new development creates a level playing field for smaller players… Now, all the micromerchants of our country can parcipate without the fear of being le out,” he added.

The decision came in the backdrop of several complaints being flagged by domesc traders on heavy discounts being given by e-commerce players to consumers. Many sellers had flagged concerns that the e-commerce giants were using their affiliates and exclusive sales agreements to create an unfair marketplace and offering some products at deep discounts.