Four sources familiar with the discussion told Reuters that Amazon and India’s Tata Group warned government officials on Saturday that plans to implement stricter regulations on online retailers would have a significant impact on their business models.
Sources said that at a meeting organized by the Ministry of Consumer Affairs and the government investment promotion agency Invest India, many executives expressed concern and confusion about the proposed rules and requested an extension of the July 6 deadline for submission of comments.
The government’s announcement on June 21, aimed at strengthening consumer protection, drew the attention of the country’s online retailers, especially market leaders Amazon and Walmart’s Flipkart.
New rules restricting flash sales, banning misleading advertising, and compulsory complaint systems and other proposals may force companies such as Amazon and Flipkart to review their business structures and may increase costs for domestic competitors including Reliance Industries’ JioMart, BigBasket, and Snapdeal .
Two sources said that Amazon believes that COVID-19 has hit small businesses, the proposed rules will have a huge impact on its sellers, and that certain provisions are already covered by existing laws.
Since the discussion was conducted in private, the source requested anonymity.
The proposed policy stipulates that e-commerce companies must ensure that none of their related companies are listed as sellers on their websites. This may particularly affect Amazon because it indirectly holds shares in at least two sellers, Cloudtail and Appario.
Regarding the terms of the proposal, a representative of Tata Sons, the holding company of India’s 100 billion U.S. dollars (approximately Rs 7,452 crore) Tata Group, thought it was problematic and gave an example that it would stop Starbucks-it has a United-in cooperation with Tata in India-by offering its products on Tata’s market website.
Two sources said that Tata executives said that these regulations will have a wide-ranging impact on the conglomerate and may limit the sales of its own brands.
Tata declined to comment.
The source said that a consumer department official argued that these regulations are to protect consumers and are not as strict as in other countries. The ministry did not respond to a request for comment.
An executive at Reliance agreed that the proposed rules would boost consumer confidence, but added that some provisions needed clarification.
Reliance did not respond to a request for comment.
© Thomson Reuters 2021