Govt tightens norms for e-commerce firms, bars them from entering into agreement for exclusive sale of products

New Delhi: Tightening norms for e-commerce firms like Flipkart and Amazon, the government Wednesday took a host of steps and barred them from selling products of the companies in which they have a stake. The commerce and industry ministry also prohibited e-commerce companies from entering into an agreement for an exclusive sale of products. “An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” the ministry said. [caption id=“attachment_4866701” align=“alignleft” width=“380”] Representational image. Reuters[/caption] Besides, the revised policy on foreign direct investment in online retail firms said that services should be provided by e-commerce marketplace entity or other firms in which e-retail company has direct or indirect equity participation or common control to vendors on the platform at arms length and in a fair and non-discriminatory manner. “Cashback provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory,” the ministry’s notification said. It further said that these companies will have to file a certificate along with a report of the statutory auditor to the RBI, confirming compliance of guidelines by September 30th of every year for the preceding fiscal. These changes will come into effect from 1 February next year. The decision comes in the backdrop of several complaints being flagged by domestic traders on heavy discounts being given by e-commerce players to consumers. As per the current policy, 100 percent FDI is permitted in marketplace e-commerce activities. It is prohibited in inventory-based activities.