Tight curbs on e-com firms; MSMEs to gain

Tight curbs on e-com firms; MSMEs to gain

In a move that will end the e-commerce monopoly and steep discount offers by marketplaces like Flipkart and Amazon, the Centre on Wednesday tightened the noose around online retailers asking them to stop any pact with firms for the exclusive sale of their products. It also barred them from selling products of companies in which they have a stake.

Besides, an e-commerce entity will not be permitted more than 25% of the sales through its marketplace from one vendor or their group companies.

Reviewing the policy for e-commerce firms, the Ministry of Commerce and Industry cautioned that the cashback provided by e-commerce entities to buyers shall be fair and non-discriminatory.

The new rules will come into force from February 1.

“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 revised e-commerce policy document said.

The move will require e-commerce companies to keep retail firms at an arms-length.

According to the revised policy, an e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

An e-commerce marketplace entity will be required to furnish a certificate along with a report of a statutory auditor to the Reserve Bank of India, confirming compliance of the above guidelines by September 30 of every year for the preceding financial year.

Heavy discounts by e-commerce marketplace companies had almost eroded the profits of brick-and-mortar retailers prompting them to lodge a complaint with the government. Though most of the rules were brought into force earlier this year, none were strictly adhered to.