Government tightens FDI rules in e-commerce to stop illegal practices

by Apparel Resources News-Desk

27-December-2018  |  2 mins read

Amazon
Image Courtesy: fashionnetwork.com

The Indian government has tightened the rules and regulations for FDI in e-commerce sector. The restrictions will force leading e-commerce players such as Flipkart and Amazon to stop retailing their exclusive-only products on their platform.

Notably, this move is initiated by the government to eliminate the alleged illegal practice of influencing the prices. The policy announced recently by the Department of Industrial Policy and Promotion (DIPP) also prevents these brands from selling items from companies in which they have a stake.

“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.”  – Indian Commerce Ministry

Reportedly, the amendments in the policy have come after various domestic sellers complained about deep discounting and alleged discrimination by e-commerce behemoths. Small traders have also raised concerns about the influence of large e-commerce players with deep pockets on their businesses and livelihoods.

The government also received complaints that e-commerce players with foreign investments were allegedly violating existing FDI criteria.

“The new rules will put an embargo on the tactics adopted by the global players to control and dominate retail trade in India through e-commerce.” – Praveen Khandelwal, Secretary General, CAIT

 Reportedly, Amazon India said that it will look into the new rules. While Flipkart, is yet to make a comment on the decision taken by the Centre.

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