Amazon, Tata Oppose New Ecommerce Policy; Says It Will Harm Digital Ecosystem
Amazon and Tata have informed the govt that its new e-commerce rules for online retailers would adversely affect the companies’ business models.
Executives Seek Clarification
Major executives gathered during Invest India, an event organised by the Consumer Affairs ministry and the centre’s investment promotion arm.
Executives serving in companies the new laws are directed towards have expressed their worries and have complained of a lack of clarification.
They have requested for the July 6 deadline for submitting comments to be extended.
What The New Laws State
The new Consumer Protection (e-commerce) Rules, 2020 were announced on June 21.
It is applicable to e-commerce entities that are established outside India.
Its main objectives include strengthening consumer protection, which has raised concerns among online retailers such as Flipkart and Amazon.
The new rules ban flash sales, false advertisements and seek to put a complaints system in place, all of which will force e-commerce players to rework their business structures.
It has also already put a ban in place for e-commerce giants to enter into exclusive deals with brands and sell their products online, for example smartphones.
It could also lead to an increase in costs for domestic rivals such as JioMart, BigBasket and Snapdeal.
Effect On Amazon
Amazon said that as the pandemic has already increased financial strains of small businesses, the new rules will further twist the knife.
It also said that some of the clauses in the new rules are already covered in existing laws.
Another clause is that e-commerce firms cannot list their related/affiliated enterprises as sellers, as is the case with Cloudtail and Appario which are listed as sellers on Amazon.
Amazon has an indirect stake in both those sellers.
Effect On Tata Group
In the case of Tata Group, the clause affects their joint venture with Starbucks.
If the new laws come into effect, Tata Group can no longer sell Starbucks products.
Tata said that the new rules will have widespread effects and could limit sales of its private brands.
The Govt’s Defence
A Consumer Ministry official defended the laws by saying that it was in the interest of consumers and was more lax compared to other countries.
A Reliance executive agreed on the consumer protection point but said that some clauses needed further explanation.
The rules came about amidst complaints from brick-and-mortar businesses that e-commerce giants were circumventing foreign investment laws using complicated business structures.
Amazon was found to have given special treatment to a few select sellers and bypassed foreign investment laws, a charge it has denied.
Commerce minister Piyush Goyal said that the govt will come out with clarifications on foreign investment rules soon.