India Proposes Tougher E-Commerce Rules

The new proposal is intended to address complaints of 'widespread cheating'

Wednesday, June 23, 2021 by Tatiora | Discussion: Personal Computing

Amid complaints from brick-and-mortar retailers in India, the Ministry of Consumer Affairs proposed a ban on flash sales on e-commerce platforms and preventing affiliate entities from being listed as sellers on Monday evening. These policies are in response to a rise in concern about what retailers allege as unfair practices employed by Amazon and Flipkart in the second largest market in the world.

In its proposal, India's Ministry of Consumer Affairs suggests that e-commerce firms should not be allowed to hold flash sales in India. These sales - akin to Black Friday and Cyber Monday in the U.S. - are very popular during the country's festive seasons. E-commerce firms have traditionally seen the largest spike in customer orders because of the heavily discounted products, which is impacting the sales of stores that don't have the same enormous online presence.

In a statement, the Ministry said: “Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller selling on platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back’ order with another seller controlled by platform. This prevents a level playing field and ultimately limits customer choice and increases prices.” 

This new proposal may prohibit Amazon, Flipkart, and other e-commerce platforms from running in-house or private labels. The proposal asks that e-commerce firms ensure that none of their related or associated parties are listed on their platforms as sellers for selling to customers directly. 

India already does not allow e-commerce firms to hold inventory or sell items directly to consumers. In order to bypass this, many firms have operated through joint ventures with local companies that basically operate as inventory holders in this way. The new proposal also asks e-commerce firms to introduce a mechanism for identifying goods based on their country of origin and suggest alternatives to "ensure fair opportunity to domestic goods."

Amazon has invested over $6.5 billion into the India side of its business and has said that it will be reviewing its policies. Flipkart's majority stake was acquired by Walmart back in 2018 for $16 billion and currently has made no comment on this new proposal. The Ministry will be seeking industry feedback over the next 2 weeks. 

Online marketplaces have greatly changed the way that many of us shop. On one hand, it's obviously very convenient and has made finding things that are perhaps out of season or not readily available in our areas much easier than ever before. On the other hand, it's true that many brick and mortar stores have suffered because of that convenience. I, admittedly, shop online more than ever (thanks especially to the pandemic).

What do you think - should there be methods in place in order to curtail the growing dominance of online platforms and drive more business to traditional brick-and-mortar stores? Share your thoughts with me!


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