Amazon, Flipkart urge govt to extend 1 February deadline for revised FDI norms compliance

  • E-commerce firms Amazon and Flipkart seek more time from government to comply with FDI norms

  • Government in December 2018 had tightened norms for e-commerce firms having foreign investment

  • The revised norms aimed at protecting interest of domestic players, who have to face tough competition from e-retailers

Amazon and Walmart-owned Flipkart have sought more time from the government to comply with the new changes in the foreign direct investment (FDI) policy for e-commerce firms as they find it difficult to execute the changes within the 1 February deadline set for the e-tailers, according to a media report.

While Amazon has asked for time until 1 June, Flipkart has asked for six months, a few people in the know of the development were quoted as saying by The Economic Times.

Amazon, in a letter to the Department of Industrial Policy and Promotion (DIPP), said on Tuesday that the firm would not be able to meet the 1 February deadline as it required a total overhaul of its business model and system for implementing the changes brought by the government, the report said.

 Amazon, Flipkart urge govt to extend 1 February deadline for revised FDI norms compliance

Representational image. Reuters.

Tightening norms for e-commerce firms having foreign investment, the government in December 2018 barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price, said a PTI report.

The revised policy on FDI in online retail, issued by the commerce and industry ministry, also said that these firms have to offer equal services or facilities to all its vendors without discrimination.

The revised norms are aimed at protecting the interest of domestic players, who have to face tough competition from e-retailers having deep pockets from foreign investors, the ministry said.

"The move would completely prevent influencing prices by e-commerce players. This will also ensure better enforcement of FDI guidelines in e-commerce companies," a senior official said.

The policy says a vendor will not be permitted to sell more than 25 per cent of its products on an online platform of a single e-marketplace firm.

"Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25 per cent of purchases of such vendor are from the marketplace entity or its group companies," the commerce and industry ministry's press note said.

Traders' body Confederation of All India Traders (CAIT) was quick to react to the government decision and demanded stringent implementation of the guidelines for sale of products by e-commerce firms.

"The government has addressed a majority of issues raised by us through amendments to FDI policy announced on 26 December, 2018. The cashback sale, discounts, exclusive sales, etc. cannot take place under the new norms. We welcome the government's decision and believe that it should be implemented strictly," CAIT secretary general Praveen Khandelwal told reporters here.

With PTI inputs

 

 

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Updated Date: Jan 16, 2019 14:43:33 IST