E-commerce curbs may cover domestic companies like Snapdeal and Paytm too
On December 26, the government barred online retailers like Flipkart India, in which Walmart is the majority shareholder, and Amazon, a unit of Amazon Inc., from selling products of companies in which they own stakes and disallowed them from entering into exclusive deals with companies such as phone-makers for selling merchandise.Updated: Jan 30, 2019 08:23 IST
Hindustan Times, New Delhi
The government is considering extending recently announced restrictions on foreign-owned e-commerce entities such as Amazon India and Flipkart to domestic firms like Snapdeal and Paytm as well to avoid complaints that it is discriminating against online retailers based overseas, two officials aware of the development said.
The matter is under consideration at the highest level of the government as pressure mounts on it from two fronts — giant foreign investors and the governments of their country of origin, and millions of small domestic traders, who want curbs on all e-commerce entities, domestic as well as foreign, the officials at two different ministries said on condition of anonymity.
On December 26, the government barred online retailers like Flipkart India, in which Walmart is the majority shareholder, and Amazon, a unit of Amazon Inc., from selling products of companies in which they own stakes and disallowed them from entering into exclusive deals with companies such as phone-makers for selling merchandise.
The new norms kick into force on Friday, February 1.
The commerce ministry’s decision to introduce the new norms followed complaints by small traders, who form a core support base of the ruling Bharatiya Janata Party (BJP), that the deep discounts offered by e-commerce firms are hurting their business.
An email query sent to the commerce ministry did not elicit any response.
The Confederation of All India Traders (CAIT), which claims to have the support of 70 million small offline and online traders, including small mom-and-pop stores, wrote a letter to Prime Minister Narendra Modi last week demanding similar curbs on domestic e-commerce firms.
“The FDI (foreign direct investment) norms as spelled out in the policy should be made applicable on domestic e-commerce players as well to restrict them from adopting any unethical business practices and remain at par with other e-commerce players,” CAIT national secretary general Praveen Khandelwal wrote to PM Modi on January 24 in a letter, a copy of which has been seen by HT.
The letter said, “In larger interest of the country and the economy, we request your good self to kindly direct the Ministry of Commerce not to budge against any pressure and do not defer or extend the stipulated date of 1st February, 2019 for implementing the policy nor bring any change or amendment in the policy”.
The government press release of December 26, 2018 contained nothing new on e-commerce norms, according to Ashwani Mahajan, national co-convenor of the Swadeshi Jagaran Manch (SJM), an affiliate of the Rashtriya Swayamsevak Sangh, the ideological mentor of the BJP.
“In fact, it is a clarification of an earlier press note-3 that was issued in 2016. The clarification was, perhaps, issued after observing non-conformity with the prevailing FDI rules by foreign e-commerce players,” he said.
“The government should have taken action against the foreign companies violating FDI norms instead of issuing clarification and giving time to observe law of the land,” he said.
“I have strong faith in the PM that he will save 7 crore small businesses by not extending the date,” Khandelwal said.
Amazon and Flipkart are seeking more time to implement the new business model.
First Published: Jan 30, 2019 07:10 IST