Traders' body urges DIPP not to allow sale of private labels on e-commerce sites

The government, earlier, had clarified that private labels were not banned from being sold on e-commerce marketplaces. One of the big players, however, stated that private labels are a small component of the business and that the government needs to address the larger issues at hand.

Private labels -- often sold at lower prices -- allow e-commerce companies to control quality and even offers better margins than big, established brands. Over the last few years, e-commerce players have introduced private labels across a variety of categories including apparel, home furnishing and grocery.

Large e-commerce marketplaces could approach the government seeking extension of the February 1 deadline as compliance with the recent changes would require at least 4-5 months at operational level, multiple sources said earlier.

However, in the letter to the DIPP Secretary, CAIT said it will strongly oppose any such extension.

"The modus operandi of these e-commerce companies for seeking extension is to keep delaying fair execution of the policy and they may continue with their sinister designs of operating all kinds of malpractices...," it said.

"Therefore, it is strongly submitted not to fall prey under malicious agenda of such e-commerce companies and no extension should be allowed under any circumstances," the traders' body claimed.

The government's move to tighten norms has hit Amazon and Flipkart the hardest as the new regulations bar online marketplaces with foreign investment to sell products of companies where they hold stakes as well as ban exclusive marketing arrangements.

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.