India has banned e-commerce companies such as Amazon and Walmart owned Flipkart Group from selling products from companies in which they have an equity interest, in its recent review of policy on Foreign Direct Investment (FDI) in e-commerce, Reuters has reported.
“E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner,” the government has said through a PIB press release.
This review has been taken up after All India Online Vendors Association (AIOVA) filed a petition in October with the anti-trust body Competition Commission of India (CCI). It alleges that Amazon favours merchants that it partly owns (example: Cloudtail and Appario).
Further, it has also barred preferential cashback offers by e-commerce giants. The government has said, “Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory”.
These new rules will help small traders and farmers who fear that US companies are edging them out from the retail space in India.