Norms for e-tailers tweaked to check discount, cashbacks – Times of India

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Norms for e-tailers tweaked to check discount, cashbacks – Times of India

NEW DELHI: The government on Wednesday tightened guidelines for FDI in e-commerce, including players, including Amazon and

Flipkart

, from selling exclusive-only products on their platforms, a move aimed at curbing the alleged practice of influencing prices.

The revised policy is unveiled by the Department of Industrial Policy and Promotion (DIPP) on Wednesday also called on the players to sell products of companies where they have a stake.

The changes in the policy have come against the backdrop of several domestic sellers complaining about deep discounting and alleged discrimination by e-commerce giants. Small traders have also been complaining about the influence of large e-commerce giants with deep pockets on their businesses and livelihoods. The government had received complaints that e-commerce players with foreign investments were allegedly flouting existing FDI norms.

“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 be able to sell such platforms by running platforms on its products. , “The revised policy said.

“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 be able to sell such platforms by running platforms on its products. , “The revised policy said.

“These random changes do not give the investor community confidence in the regulatory framework,” said a senior executive at an e-commerce firm. “We are evaluating the circular.”

Domestic players, however, cheered the changes “Snapdeal welcomes updates to FDI policy on e-commerce. Marketplaces are meant for genuine, independent sellers, many of whom are MSMEs These changes will enable a level playing field for all sellers, helping them leverage the reach of e-commerce, ”

Snapdeal

co-founder

Kunal Bahl

said on

Twitter

.

The revised policy also said that cashback provided by group companies of marketplace entity to buyers will be “fair and non-discriminatory”. This would mean that cashbacks liberally may ease.

The policy, which comes into effect from February 1, has made it clear that a vendor will not be allowed to sell more than 25% of its products on an online platform of a e-marketplace firm.

“Inventory of a vendor will be deemed to be controlled by e-commerce market entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies,” according to the policy. The policy also tightens the compliance norms, making it mandatory for e-commerce players with FDI

statutory auditor

to the reserve

Bank of India

, confirming compliance to the guidelines by September 30 every year

According to industry experts, industry experts said, it would be online marketplaces in India, their business models, shareholding pattern and transactions, the industry experts said.

Inventory-based model of e-commerce, followed by global retailers such as Amazon, means an e-commerce activity where the inventory of goods and services is owned by e-commerce entity and the consumers are directly sold. It helps keep prices low as products In comparison, the marketplace-based model of e-commerce means providing a technology platform by an e-commerce entity to a facilitator between buyer and seller. The government allows 100% FDI under automatic route in the marketplace of e-commerce.

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