India has proposed banning flash sales on e-commerce platforms and preventing affiliates of the e-commerce entity from being listed as sellers, in a bid to tighten rules that could severely hurt the prospects of Amazon and Walmart’s Flipkart in the country.
The proposed rules from the Ministry of Consumer Affairs come amid complaints by brick-and-mortar retailers that foreign e-commerce players are bypassing Indian laws by using complex business structures. They are raising their voice against the alleged unfair practices by Amazon and Flipkart to expand their operations in India.
The rules say that e-commerce companies should not hold flash sales in India. For those who are unaware, flash sales are hugely popular during the festive season but have faced anger among offline sellers who say they cannot compete with the deep discounts online.
It also adds that e-commerce firms must also ensure that none of their “related parties and associated enterprises” are listed as sellers on their shopping websites, and no related entity should sell goods to an online seller operating on the same platform.
Similar to the recent IT rules, India is also proposing the e-commerce firms appoint a Chief Compliance Officer, a nodal contact person for 24×7 coordination with the law enforcement agencies, and officers to ensure compliance to their orders as well as a resident grievance officer for redressing of the grievances of the consumers on the e-commerce platform.
With the new rules, Amazon, Flipkart, and other similar e-commerce platforms may be prohibited from running their private label brands as it asks firms to ensure that none of their related and associated parties are listed on their platforms as sellers for selling to customers directly.
Currently, India does not allow e-commerce firms to hold inventory or sell items directly to consumers. To bypass this, the companies are operating through joint ventures with local companies that operate as inventory-holding firms.
In response, Amazon has said that it is reviewing the proposed policies while Flipkart hasn’t commented on the matter. The proposal, which is applicable to both Indian and foreign players, is open for public consultation until July 6.
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