On Thursday (3 January), Department of Industrial Policy and Promotion (DIPP) has clarified that e-commerce firms like Flipkart and Amazon will be allowed to sell private label products on their platforms, reports Business Standard (BS).
In its e-commerce policy note released on 26 December 2018, the government had barred marketplace e-commerce companies from selling products under a private label owned by them.
Private labels are unique brand names used by a firm to sell products which are similar to those of established brands but at lower prices. These private labels are generally more profitable for the firm and lead to better margins.
“Physical retailers also have private labels. It is a legitimate business practice. There is no reason to single out e-commerce firms. It is not a publicly held firm, so they have every right to have a run with their business plans. Let the Competition Commission of India look into any issues, if there are any,” said Arvind Singhal, of Technopak Advisors.
Criticism From Local Trading Associations
“The new press note is explicit. E-commerce companies with FDI can’t sell their own goods, which means private labels are not allowed. The new clarification note is a simple stupid confusion or losing guts and backtracking,” said CAIT National Secretary General Praveen Khandelwal.
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