ETtechBengaluru: The country’s largest e-commerce companies, including Flipkart, Amazon India and Tata Group, have told the government that they are concerned about the “related-party clause” in the draft regulations for the industry that can prevent them from selling on their online platforms, according to people in the know of discussions held between officials and industry executives on Saturday.
Top executives and industry groupings such as FICCI, CII, IAMAI and Assocham also flagged their disquiet over the proposal to not allow an e-commerce platform from using its name in its private brand at the meeting organised by the department of consumer affairs and Invest India, sources said.
Citing the “exhaustive and confusing“ nature of the draft e-commerce rules, the industry is seeking time until the end of July to submit their views, people in the know told ET.
The industry associations are expected to make a formal request to the government on Monday, seeking more time and further discussion, they added.
The government had released the draft India e-commerce regulations on June 21 and directed industry members to submit their observations by July 6.
Also Read: New India e-commerce rules and their impact, explained
The definition of “related party” has been made “so broad that it could make even a logistics player servicing an online order a related party”, said one person cited above. The draft rules propose that only a person or entity involved in ‘purpose of fulfilment of orders’ be considered as an e-commerce firm.
During the meeting, the government officials cited “stricter” e-commerce rules in global markets like Europe, the US, Singapore and others, sources said.
Emails sent to spokespersons of Reliance Industries Ltd. (RIL) and Paytm did not elicit any response. Amazon India and Flipkart declined to comment. An email sent to the joint secretary of the consumer affairs department did not elicit any response.
At the meeting, RIL representatives said the policy will boost consumer trust in e-commerce but also added that more time is needed for compliance clarity, according to sources who said Paytm executives also largely welcomed the proposals.
Without commenting specifically on ET’s query on the concerns it had raised with the government over related parties and private labels, a spokesperson of Tata Group said it is “supportive of government of India’s efforts to enhance the overall policy framework, both in terms of the consumer protection as well as foreign direct investment (FDI)”.
“We believe, such strong policy framework is essential for protection of the Indian consumer, SME sector and industry at large. We are reviewing the draft e-commerce rules and will share our responses on the same, within the stipulated framework and timelines,” the spokesperson said.
Contradictory Clauses
Terming the “related-party clause” as a significant hurdle, e-tailers pointed out that it could lead to situations where “a last-mile delivery partner of an e-commerce firm is treated like a related party, complicating the regulations further, even though it might have been unintentional”.
“The Tata group official was very vocal on the related-party clause and that it can have a huge impact including that (the group) can’t sell Starbucks products on its online platforms as it runs the offline cafe chain through a joint venture with the American firm,” said one of the sources who briefed ET.
“Overall, these issues were raised and some clauses are contradictory to the FDI laws for e-commerce in India. You can’t ask Flipkart and Amazon to follow both,” the person added.
The proposals disallowing the use of brand names of e-commerce platforms in the private brands sold on their platforms also came in for debate, according to those in the know.
“Tatas also raised the point that its brand name has huge trust among consumers and not allowing it to use the same for its private brands, for example Tata Sampann, for online retailing would not be in the spirit of enhancing consumer choice in e-commerce,” the sources said.
Flashpoint
The proposed changes for e-commerce have kicked up a storm since June 21, with the proposal indicating a blanket ban on flash sales being heavily criticised by e-tailers, brands and other stakeholders. Government officials did not immediately clarify how it differentiates between ‘conventional’ flash sales and other such events at the meeting, sources said.
Earlier, officials had issued a clarification saying they don’t plan to ban all flash sales but only those that are ‘back-to-back’ and end up hiking prices for consumers.
ET has previously reported that e-commerce companies are unhappy about the proposal to ban online flash sales while offline stores are allowed to hold such events. This has been an area of conflict between brands—especially smartphones, online marketplaces and offline retailers of smartphones.
At the meeting, e-tailers also argued that the proposed laws will hurt investments and affect small businesses that are increasingly coming online to battle the impact of the ongoing pandemic.
“They also highlighted that the guidelines do not help consumers and there is a lack of parity between online and offline sellers which will hurt the interest of consumers and small businesses,” said a person cited above.
Seeking clarity
Further, platforms selling online services like travel bookings and food delivery are also seeking clarity from the government on how they can be clubbed with platforms that are selling goods.
ET reported last month that the scope of the proposed policy changes goes beyond Flipkart or Amazon India and spills over to online platforms offering services like travel bookings, food delivery and on-demand home services, among others.
It is not immediately clear if the government will extend the Tuesday deadline. Sources said government officials were insisting on receiving feedback by July 6 but said they will consider the requests once submissions are made in writing.
The policy overhaul comes at a time when e-commerce platforms have started to see a gradual recovery in sales with consumers now buying all kinds of goods—essentials and non-essentials. E-tailers have seen muted sales from April to June due to the second wave of Covid-19 and are only now planning a slew of sale events.
Top executives and industry groupings such as FICCI, CII, IAMAI and Assocham also flagged their disquiet over the proposal to not allow an e-commerce platform from using its name in its private brand at the meeting organised by the department of consumer affairs and Invest India, sources said.
There was a broad consensus that the data-related proposals should be included only in the upcoming Personal Data Protection Bill and not be made part of the proposed e-commerce regulations, they added.
Citing the “exhaustive and confusing“ nature of the draft e-commerce rules, the industry is seeking time until the end of July to submit their views, people in the know told ET.
The industry associations are expected to make a formal request to the government on Monday, seeking more time and further discussion, they added.
The government had released the draft India e-commerce regulations on June 21 and directed industry members to submit their observations by July 6.
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Also Read: New India e-commerce rules and their impact, explained
The definition of “related party” has been made “so broad that it could make even a logistics player servicing an online order a related party”, said one person cited above. The draft rules propose that only a person or entity involved in ‘purpose of fulfilment of orders’ be considered as an e-commerce firm.
During the meeting, the government officials cited “stricter” e-commerce rules in global markets like Europe, the US, Singapore and others, sources said.
Emails sent to spokespersons of Reliance Industries Ltd. (RIL) and Paytm did not elicit any response. Amazon India and Flipkart declined to comment. An email sent to the joint secretary of the consumer affairs department did not elicit any response.
At the meeting, RIL representatives said the policy will boost consumer trust in e-commerce but also added that more time is needed for compliance clarity, according to sources who said Paytm executives also largely welcomed the proposals.
Without commenting specifically on ET’s query on the concerns it had raised with the government over related parties and private labels, a spokesperson of Tata Group said it is “supportive of government of India’s efforts to enhance the overall policy framework, both in terms of the consumer protection as well as foreign direct investment (FDI)”.
“We believe, such strong policy framework is essential for protection of the Indian consumer, SME sector and industry at large. We are reviewing the draft e-commerce rules and will share our responses on the same, within the stipulated framework and timelines,” the spokesperson said.
Contradictory Clauses
Terming the “related-party clause” as a significant hurdle, e-tailers pointed out that it could lead to situations where “a last-mile delivery partner of an e-commerce firm is treated like a related party, complicating the regulations further, even though it might have been unintentional”.
“The Tata group official was very vocal on the related-party clause and that it can have a huge impact including that (the group) can’t sell Starbucks products on its online platforms as it runs the offline cafe chain through a joint venture with the American firm,” said one of the sources who briefed ET.
“Overall, these issues were raised and some clauses are contradictory to the FDI laws for e-commerce in India. You can’t ask Flipkart and Amazon to follow both,” the person added.
The proposals disallowing the use of brand names of e-commerce platforms in the private brands sold on their platforms also came in for debate, according to those in the know.
“Tatas also raised the point that its brand name has huge trust among consumers and not allowing it to use the same for its private brands, for example Tata Sampann, for online retailing would not be in the spirit of enhancing consumer choice in e-commerce,” the sources said.
Flashpoint
The proposed changes for e-commerce have kicked up a storm since June 21, with the proposal indicating a blanket ban on flash sales being heavily criticised by e-tailers, brands and other stakeholders. Government officials did not immediately clarify how it differentiates between ‘conventional’ flash sales and other such events at the meeting, sources said.
Earlier, officials had issued a clarification saying they don’t plan to ban all flash sales but only those that are ‘back-to-back’ and end up hiking prices for consumers.
ET has previously reported that e-commerce companies are unhappy about the proposal to ban online flash sales while offline stores are allowed to hold such events. This has been an area of conflict between brands—especially smartphones, online marketplaces and offline retailers of smartphones.
At the meeting, e-tailers also argued that the proposed laws will hurt investments and affect small businesses that are increasingly coming online to battle the impact of the ongoing pandemic.
“They also highlighted that the guidelines do not help consumers and there is a lack of parity between online and offline sellers which will hurt the interest of consumers and small businesses,” said a person cited above.
Seeking clarity
Further, platforms selling online services like travel bookings and food delivery are also seeking clarity from the government on how they can be clubbed with platforms that are selling goods.
ET reported last month that the scope of the proposed policy changes goes beyond Flipkart or Amazon India and spills over to online platforms offering services like travel bookings, food delivery and on-demand home services, among others.
It is not immediately clear if the government will extend the Tuesday deadline. Sources said government officials were insisting on receiving feedback by July 6 but said they will consider the requests once submissions are made in writing.
The policy overhaul comes at a time when e-commerce platforms have started to see a gradual recovery in sales with consumers now buying all kinds of goods—essentials and non-essentials. E-tailers have seen muted sales from April to June due to the second wave of Covid-19 and are only now planning a slew of sale events.
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