E-commerce firms offer huge discounts to clear stocks ahead of 1 February govt regulations

  • Discounts being offered by e-commerce firms range from 3-5 percent higher than those offered during Diwali

  • Government has said that the companies will be prevented from entering into exclusive agreements with sellers

  • The rules were announced on 26 December, giving companies just a month to execute these changes

It is discount time again with e-commerce sellers offering discounts on a slew of products from grocery to smartphones prior to the government’s new rules before 1 February. The government’s rule banning e-commerce companies such as Amazon.com and Walmart-owned Flipkart Group from selling products from companies in which they have an equity interest will be applicable from 1 February.

Discounts being offered by e-commerce firms range from 3-5 percent higher than those offered during Diwali. This could be to clear stocks, a report in The Economic Times said.

In a statement, the government said that the companies will be prevented from entering into exclusive agreements with sellers.

The new regulations build on existing rules under which foreign investors can acquire 100 percent of e-commerce companies, with the exception of a model based on inventory from which they are barred.

Amazon and Walmart-owned Flipkart have sought an extension of the 1 February deadline for complying with the revised FDI norms in e-commerce, stating that they need more time to understand the details of the framework.

 E-commerce firms offer huge discounts to clear stocks ahead of 1 February govt regulations

Representational image. Reuters

Another provision states that the inventory of a vendor will be seen as controlled by a marketplace, if over 25 percent of the vendor’s purchases are from the marketplace entity, including the latter’s wholesale unit.

"We await clarifications from the government on the new policy changes. As we seek clarity, we have written to the government requesting an extension of four months," an Amazon India spokesperson said, according to a PTI report.

The spokesperson added that with over 4 lakh sellers and a large volume of daily transactions on the Amazon India marketplace, the company needs "adequate time to understand the details of the policy" and asserted that the company remains "committed to be compliant to all local laws, rules and regulations".

While Flipkart did not respond to an e-mail query, the PTI report said, adding sources said the company has made a similar representation for extension of the upcoming deadline.

A senior industry executive said the rules were announced on 26 December, giving companies just a month to execute these changes. Industry watchers contend that in most cases, players have to re-work their operational parameters and that the 1 February deadline would not provide enough time to implement the changes.

Traders' body CAIT has urged the government not to accede to any demand by large e-commerce players or US or Indian associations for changes or delayed implementation of revised FDI norms for e-commerce. Confederation of All India Traders (CAIT) warned that any move to amend the policy will be opposed by the trading community "tooth and nail" and demanded a probe into the business activities of large e-commerce players.

--With inputs from agencies

 

 

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Updated Date: Jan 21, 2019 16:34:21 IST