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E-tailers like Amazon, Flipkart need to treat all sellers equally, says draft e-commerce policy

The government is trying to address the burning issues of preferred vendors and online discounting which have marred the growth of offline retailers in India.

March 14, 2021 / 10:52 AM IST

In yet another move to clarify the existing rules with an aim to ensure that there is no possibility of another circumvention, the government has come up with a draft e-commerce policy which asks e-tailers such as Amazon and Flipkart to ensure that they will treat all their sellers equally.

"E-commerce operators must ensure equal treatment of all sellers/vendors registered on their platforms and not adopt algorithms which result in prioritising select vendors/sellers," said the draft which has come out following an inter-ministerial meeting of the government on March 13.

"E-commerce operators must ensure to bring out clear and transparent policies on discounts, including inter alia the basis of discount rates funded by platforms for different products/suppliers and implications of participation/non-participation in discount schemes, so as to ensure fair and equal treatment," it added.

The government is trying to address the burning issues of preferred vendors and online discounting which have marred the growth of offline retailers in India.

In India, e-tailers are known to be having a set of preferred vendors who get a majority of the business generated by these companies.

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In 2018, the government had come up with Press Note 2, revising the then-existing Press Note 3. It asked the marketplaces to ensure that they will not sell the products of their group companies on their platforms.

Following the clarification, Amazon did a rejig in its structure in India.

In February 2019, Catamaran Ventures raised its stake in Cloudtail's parent company Prione Business Services. The move reduced Amazon Asia's stake in Cloudtail to 24 percent from the earlier 49 percent, with Catamaran Ventures’ stake rising to 76 percent from 51 percent earlier.

Following this, Cloudtail ceased to be an Amazon group company, making it compliant with the rules on the papers but yet not serving the purpose with which the norms were straightened.

A recent Reuters report claimed that 35 vendors including two of the most prominent ones where Amazon had indirect stakes -- Cloudtail (in partnership with Narayana Murthy's Catamaran Ventures) and Appario contributed to two-third of its online sale in India till 2019.

The government has lined up three more meetings on 17th, 18th and 19th of March to deliberate upon the issues of foreign direct investment (FDI) in e-commerce. These meetings will be attended by Amazon, Flipkart, Confederation of All India Traders, Retailers Association of India, Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry.
Priyanka Sahay
Subhayan Chakraborty
first published: Mar 13, 2021 05:44 pm

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