In a move that may come as a major setback to e-commerce players, the Ministry of Commerce and Industry Wednesday said that e-commerce companies running marketplace platforms, like Amazon and Flipkart, cannot sell products on their platform through companies where they hold an equity stake.
The commerce and industry ministry’s decision to introduce the new norms follows complaints by small traders, who contend that deep discounts offered by the likes of Amazon and Flipkart are driving them out of business. The issue is of crucial importance for the government, given that national elections are due by May and traders are a core voter base for the ruling Bharatiya Janata Party.
Cashbacks, exclusive sales, brand launches, preferential services or programmes such as Amazon Prime and Flipkart Plus could run into difficulties under the new dispensation that seeks to ensure that these platforms are truly impartial marketplaces. Entities such as Cloudtail, in which Amazon has a stake, will likely not be able to sell on the platform. Flipkart’s new owner Walmart may itself not be able to sell on the website
“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 commerce ministry said in a statement.
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