Amazon, Flipkart Can Stop Discounts After Govt. Warning; Local Kirana Stores Will Be Protected Against Ecommerce

We have been bringing continuous updates to you on how India has been taking measures to safeguard their small scale local retailers from the allegedly ‘predatory behavior’ of the foreign-funded retail online joints, like Amazon and Walmart owned Flipkart.

The Commerce Minister Piyush Goyal had made it very clear that while he, along with the rule-making committee was prepared to listen to the queries companies had in the new FDI policies, he was committed to protect the small retailers. He has attended a string of meetings in the past week, with executives of different technological and online retailer companies to provide a detailed discussion on all of his FDI policies, active since Feb 1, 2019.

Amazon and Flipkart will Have to Cut Discounts

In continuation of the consultations that the Indian Commerce minister Piyush Goyal has been having with different stakeholders on the ecommerce business, he held one more meeting this Monday where representatives from Amazon and Flipkart were also preset among others.

Goyal has made it crystal clear that the foreign e-commerce firms must comply with the new foreign investment rules, which prohibits them from applying steep online discounts. Practicing this, especially on domains such as electronic products like mobile phones. While Goyal was ready to listen to queries from such foreign elements and to include their say in the new FDI draft, he was committed to protecting small traders from predatory behavior by foreign-funded companies.

The government is trying its best to protect its small retailers in the country but this has caused tensions for Amazon and Flipkart as they thrive mainly due to their exemplar discount routines and has managed to secure such a wide customer base in the country.

What Do Amazon and Flipkart Have To Say?

Not only did the government strengthened the FDI rules, it also alleged that online retailers use complex business structures to circumvent federal rules, and still burn billions of dollars to offer discounts. While the government has strictly warned them to not break these rules neither on paper and nor by action, Amazon and Flipkart deny any such wrongdoing.

After multiple complaints from local retailers and them going into heavy losses, the govt brought in new policy in February this year and said that the ecommerce giants must control their selling strategies, so as to not disrupt any local retailer from making his profits. Amazon and Flipkart argued they provide logistics support and other services to small Indian retailers who use their e-commerce platforms to boost their businesses, said the third source who attended the meeting.

All of these things, along with India recently demanding to store all the data related to Indian customers within the country, focusing on data localisation, led to already heightened trade tensions between India and US. This led to the US Secretary of State Mike Pompeo to lead to a 3-day visit to India, on matters of same concerns.