Leading online firms such as Amazon and Flipkart are planning to team up and form united front against government’s decision, restricting online sellers from offering heavy discounts and other changes in selling policy. Both the companies are planning to have a dialogue with the government and form a united front with the help of industry bodies including Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industry (CII), along with the leading investment firms including Tiger Global, SoftBank, Naspers, and Sequoia.
According to some industry experts, the government’s decision can make it difficult for Flipkart, Amazon and other e-commerce firms to do business in India. If the government put a stop to the flash sales and bar online marketplaces to sell via vendor firms that e-commerce companies hold a stake in, this will lead e-commerce companies to revamp their business model and change the way they conduct business in India.
The change in private label policy and cut-down in the amount of business that e-commerce companies do in the segment are likely to impact the number of jobs provided by companies and this may also lead to the situation where companies will rethink on their expansion plans in India.
The government, a few weeks back announced alteration in the policy of online selling goods and services in India. The Ministry of Commerce and Industry has prohibited e-commerce companies from selling the products of the firms in which they hold the stake. Additionally, the Ministry has also confined e-commerce companies from signing an agreement for exclusive sales of products.
The government has also introduced some restrictions on the cashback schemes and deep discounting offered by e-commerce companies. These changes in the e-commerce draft policy are likely to be effective from 1st February 2019.
Trader bodies in the country such as Swadeshi Jagran Manch and Confederation of All India Traders (CAIT) have been constantly pressuring the government to introduce e-commerce policy that keeps the interests of traders in India. Moreover, any changes in Foreign Direct Investment (FDI) policy supporting global players are likely to be opposed by trader bodies in the country.