India\`s e-commerce rules: concerns raised by Tata_ Amazon

Global e-commerce giant Amazon and Tata Group have warned Indian government officials that the plans for tougher rules for online retailers would have a major impact on their business models.

At a meeting organised by the consumer affairs ministry and the government's investment promotion arm_ Invest India_ many executives on Saturday expressed concerns and confusion over the proposed rules and asked that the July 6 deadline for submitting comments be extended_ said the sources.

The government's tough new e-commerce rules announced on June 21 aimed at strengthening protection for consumers_ caused concern among the country's online retailers_ notably market leaders Amazon and Walmart Inc's Flipkart_ reports Reuters.

New rules limiting flash sales_ barring misleading advertisements_ and mandating a complaints system_ among other proposals_ could force the likes of Amazon and Flipkart to review their business structures and may increase costs for domestic rivals including Reliance Industries' JioMart_ BigBasket_ and Snapdeal.

Amazon argued that coronavirus had already hit small businesses and the proposed rules will have a huge impact on its sellers_ arguing that some clauses were already covered by existing law_ two of the sources said.

The proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular as it holds an indirect stake in at least two of its sellers_ Cloudtail and Appario.

On that proposed clause_ a representative of Tata Sons_ the holding company of India's $100 billion Tata Group_ argued that it was problematic_ citing an example to say it would stop Starbucks - which has a joint-venture with Tata in India - from offering its products on Tata's marketplace website.

The Tata executive said the rules will have wide ramifications for the conglomerate and could restrict sales of its private brands_ according to two of the sources.

Tata declined to comment.

The sources said that a consumer ministry official argued that the rules were meant to protect consumers and were not as strict as those of other countries. The ministry did not respond to a request for comment.

A Reliance executive agreed that the proposed rules would boost consumer confidence_ but added that some clauses needed clarification.

Reliance did not respond to the request for comment.

The rules were announced last month amid growing complaints from India's brick-and-mortar retailers that Amazon and Flipkart bypass foreign investment law using complex business structures. The companies deny any wrongdoing.

A Reuters investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers and bypassed foreign investment rules. Amazon has said it does not give favourable treatment to any seller.

The government will soon issue certain clarifications on the foreign investment rules_ Indian commerce minister Piyush Goyal told reporters on Friday.