Centre Fixes Norms For E-commerce Firms, Bars Them From Holding Exclusive Sales

New Delhi: The Centre on Wednesday took a slew of steps to keep e-commerce firms in check. Now e-commerce firms like Amazon have been barred from selling products of companies in which they have a stake. The Commerce and Industry ministry also barred them from entering into an agreement for the 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 was quoted as saying by PTI.

Besides, the revised policy on foreign direct investment (FDI) 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 in a fair and non-discriminatory manner.

“Cashback provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory,” the ministry’s notification said. It added that these companies will have to file a certificate along with a report of a 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% FDI is permitted in marketplace e-commerce activities. It is prohibited in inventory-based activities.

Meanwhile, traders’ body CAIT has welcomed the Government’s move to tighten norms for the sale of products by e-commerce firms but demanded the 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.


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