Govt bars e-com firms from exclusive sale of products

“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,” the commerce and industry ministry said in a statement.

“E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner,” the revised policy on foreign direct investment in online retail firms said.

“Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory,” the statement said.

E-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of guidelines, by September 30 of every year for the preceding financial year.

The latest decision has come after several complaints by domestic traders on heavy discounts being given to consumers by e-commerce players.

Currently, 100 per cent foreign direct investment (FDI) is permitted in marketplace e-commerce activities, while FDI is prohibited in inventory-based activities.

The government’s move to tighten regulations for sale of products by e-commerce companies has been welcomed by the Confederation of All India Traders (CAIT). “It is a big achievement after a long struggle. If it is implemented in proper spirit, malpractices and predatory pricing policy and deep discounting of e-commerce players will be a matter of past,” said CAIT secretary general Praveen Khandelwal. (RKS)

Fibre2Fashion News Desk – India