Flipkart, Amazon hit as govt tightens e-commerce norms

The revised e-commerce norms come in the backdrop of several complaints by traders on deep discounts offered by Flipkart and Amazon

The government has prohibited e-commerce companies from entering into exclusive deals for products.

Tightening e-commerce norms for online retail firms, such as Flipkart and Amazon, the government on Wednesday took a host of steps and barred them from selling products of the companies in which they have stakes. The commerce and industry ministry also prohibited e-commerce companies from entering into exclusive deals for 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 ministry said.

Besides, the revised policy on FDI in e-commerce said that services should be provided by e-commerce marketplace entity or other firms in which the e-retail company has a direct or indirect equity participation or common control to vendors on the platform at arms length and in fair and non-discriminatory manner.

“Cashback provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory,” the ministry’s notification said.

It further said that these companies will have to file a certificate along with a report of statutory auditor to the Reserve Bank of India, confirming compliance of guidelines by 30 September of every year for the preceding fiscal.

These changes will come into effect from 1 February 2019.

The decision comes in the backdrop of several complaints by domestic traders on heavy discounts being given by e-commerce players, such as Flipkart and Amazon, to consumers.

According to the current policy for FDI in e-commerce, 100% FDI is permitted in e-commerce marketplace activities. It is prohibited in inventory-based activities.