By Aditya Kalra
NEW DELHI (Reuters) – Amazon.com Inc (NASDAQ 🙂 and India’s Tata Group warned government officials on Saturday that stricter rules plans for online retailers would have a big impact on their business models, they told Reuters four sources familiar with the discussions.
At a meeting hosted by the Ministry of Consumer Affairs and the government’s investment promotion arm, Invest India, many executives expressed concern and confusion about the proposed rules and called for the July 6 deadline to be extended for comment. sources said.
Stringent new government e-commerce rules announced on June 21 with the goal of strengthening consumer protection caused concern among the nation’s online retailers, especially market leaders Amazon and Walmart’s (NYSE 🙂 Flipkart. Inc.
New rules limiting flash sales, excluding misleading ads, and requiring a complaints system, among other proposals, could force companies like Amazon and Flipkart to review their business structures and may increase costs for domestic rivals, including JioMart, BigBasket and Snapdeal from Reliance Industries.
Amazon argued that COVID-19 had already affected small businesses and the proposed rules will have a major impact on its sellers, arguing that some clauses were already covered by existing law, two of the sources said.
The sources asked not to be identified as the discussions were private.
The proposed policy states that e-commerce companies must ensure that none of their related companies appear as a seller on their websites. That could affect Amazon in particular, as it has an indirect stake in at least two of its sellers, Cloudtail and Appario.
On that proposed clause, a representative for Tata Sons, India’s $ 100 billion holding company of the Tata Group, argued that it was problematic, citing an example to say that it would stop Starbucks (NASDAQ :), which owns a business. joint with Tata. in India – to offer their products on the Tata Marketplace website.
The Tata executive said the rules will have wide ramifications for the conglomerate and could restrict sales of its private labels, according to two of the sources.
Tata declined to comment.
The sources said that a Consumer Ministry official argued that the rules were meant to protect consumers and were not as strict as those in other countries. The ministry did not respond to a request for comment.
A Reliance executive agreed that the proposed rules would boost consumer confidence, but added that some clauses needed clarification.
Reliance did not respond to a request for comment.
The rules were announced last month amid growing complaints from traditional Indian retailers that Amazon and Flipkart circumvent foreign investment law using complex business structures. The companies deny any wrongdoing.
An investigation by Reuters https://www.reuters.com/investigates/special-report/amazon-india-operation in February cited documents from Amazon showing that it granted preferential treatment to a small number of its sellers and ignored the foreign investment rules. Amazon has said that it does not treat any seller favorably.
The government will soon issue certain clarifications on foreign investment rules, Indian Trade Minister Piyush Goyal told reporters on Friday.
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