Centre bars e-tailers from predatory discount schemes

The commerce and industry ministry also prohibited e-commerce companies from entering into an agreement for exclusive sale of 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 foreign direct investment in online retail firms said that services should be provided by e-commerce marketplace entity or other firms in which e-retail company has a direct or indirect equity participation or common control to vendors on the platform at arm’s length and in fair and non-discriminatory manner. “Cash back 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 RBI, confirming compliance of guidelines by September 30th of every year for the preceding fiscal. These changes will come into effect from February 1 this year.

The decision comes in the backdrop of several complaints being flagged by domestic traders on heavy discounts being given by e-commerce players to consumers. As per the current policy, 100 percent FDI is permitted in marketplace e-commerce activities. It is prohibited in inventory-based activities.

Traders welcome Govt move to tighten norms for e-commerce cos

Traders’ body CAIT welcomed the government’s move to tighten norms for sale of products by e-commerce firms but demanded introduction of an e-commerce policy and regulator to monitor the sector. “It is a big achievement after a long struggle. If it is implemented in proper spirit, malpractices and predatory pricing policy and deep discounting of e-commerce players will be a matter of past,” Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal said.

The government took a host of steps and barred e-commerce firms from selling products of the companies in which they have equity stakes or management control. The commerce and industry ministry also prohibited e-commerce companies from entering into an agreement for exclusive sale of products. Khandelwal said measures announced by the government should be implemented with retrospective effect from April 1, 2018.

“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.