Walmart-owned Flipkart has told the government that the firm is facing the risk of ‘significant customer disruption’ if the implementation of new policies for e-commerce is not delayed by six months, said a source.
The government of India recently revised its foreign direct investment policy for e-commerce and the restrictions, to be enforced from February 1, will bar e-commerce companies from selling products from firms in which they have an equity interest and also ban them from reaching deals with sellers to only sell on one platform.
In a letter to Industries department, Flipkart Chief Executive Officer Kalyan Krishnamurthy said that the rules required the company to assess all elements of its business operations.
“Redesigning numerous elements of our technology systems to ensure that we can validate and evidence our compliance, in such a compressed period of time, has caused us to divert significant resources. The regulations could also cause significant customer disruption if the deadline for compliance wasn’t extended.” – Kalyan Krishnamurthy, Chief Executive Officer, Flipkart
However, it is unlikely that the government will change the policy’s implementation date.
The move has jolted Walmart which had invested US $ 16 billion in Flipkart last year, in one of its biggest deals ever, and also Amazon which has committed US$ 5.5 billion in India investments.
According to sources, both Flipkart and Amazon have started working on approaching thousands of sellers on their platforms to ensure the companies comply with the regulations even as they are seeking an extension to the deadline.
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