New Delhi: As e-commerce regulations are tightened, fight between foreign companies Amazon, Flipkart and Indian companies Reliance, Tata Group is set to intensify. Foreign brokerage, Jefferies said in a note, “The proposed rules now target indirect ownership in vendors, own label, flash sales. Fight between foreign cos (Amazon, Flipkart) & Indian cos (Reliance, Tata Grp) is set to intensify”.Also Read - IRE vs IND: Hardik Pandya-Deepak Hooda Star As India Rout Ireland By 7 Wickets In 1st T20
- India’s e-commerce industry faces complex regulations, the note said. While B2B & single brand retail have a stable framework, FDI in inventory-led e-comm. is prohibited. 100% FDI is allowed in marketplace but regulations are evolving – 2018 rules pushed Amazon to reduce stake in a key seller.
- In July-2020, new regulations were enacted with an intent to protect customer interest. However, in 2021, there have been amendments to those rules, still at a draft stage and open to public comments until 6-July — these are applicable to both Indian and foreign backed platforms, but seem more relevant for Amazon & Flipkart, based on our reading, Jefferies said.
- Increase in the scope of related parties to now include common chain of directors, more than 10% common ultimate shareholders, 5% shareholding in related entities etc.
- Related party, as defined above, cannot become a seller on the platform and also cannot do anything that e-commerce entity itself cannot do.
- Marketplace cannot sell goods or services to any vendor on its platform. “Marketplace name or brand cannot be used for the product – ‘Amazon’ Alexa for example, in our view; • Marketplace subject to fallback when vendor fails to perform; flash sale favouring certain vendors only is not allowed etc”, the note said.
- Amazon started in 2013 as a marketplace but faced issues on FDI. In 2014, Amazon entered into a partnership with Catamaran Mgmt. Services (promoted by Infosys co-founder Narayana Murthy), which owned 51% while Amazon owned 49% in Prione Business which owned Cloudtail India, the key vendor on Amazon India platform. However, the 2018 regulation pushed Amazon to reduce its stake to 24% with Catamaran now at 74%.
- FDI in any form of retail was banned in India until 1996. However, 100% FDI was allowed in wholesale cash & carry in 1997 which was also extended to B2B e-commerce in 2000.
- In 2006, 51% FDI was allowed in single-brand retail which was made 100% in 2012 with some restrictions (30% local sourcing etc.).
- Single brand retailers have been also been allowed to run B2C e-commerce from 2015. In 2013, FDI was allowed in multi-brand retail (with some restrictions). However, the final approval was left to individual states and today, around 11 states and 1 Union Territory allow FDI, while rest do not. E-commerce models.
- In 2016, the e-commerce policy allowed 100% FDI in marketplace but banned the Inventory-led model. Over the years, the marketplace regulations have evolved covering aspects like control over inventory and direct/ indirect investments in vendors. 2018 regulations.
- The industry managed to create alternate structures in order to adhere to the regulations until 2017. This prompted lawmakers in 2018 to tighten their grip by restricting: a) control over inventory which covered cases where a vendor buys more than 25% of its products directly or indirectly (group firms of marketplace); b) direct or indirect ownership in vendor; c) level playing field & no preference to any vendor; d) no exclusive partnerships with vendors.
(This is an IANS copy. India.com has not Edited the Text and Header) Also Read - IRE vs IND 1st T20I Highlights Cricket Scorecard: Pandya-Hooda Star As India Won By 7 Wickets Also Read - India's Warm-up Game Against Leicestershire Ends In A Draw, Ashwin Impresses On Day 4