In a sudden U-turn from its April 15 guidelines, allowing e-commerce companies to operate, the government has put a spanner in their plans by restricting e-commerce companies to trade only in essential goods and groceries.
In a notification on April 15, the government had put out a list of sectors that would be able to resume operations partially from April 20, provided it maintained social distancing norms. The list included e-commerce companies like Amazon, Flipkart and others.
However, a day before they were supposed to resume operations, another notification from the government disallowed e-commerce from trading in anything but essentials.
"This will create a level-playing field for small retailers," Commerce and industry minister Piyush Goyal said after the home ministry came out with the notification.
Track this blog for latest updates on the coronavirus outbreak
The Confederation of All India Traders (CAIT) had written a series of letters to Goyal and Home Minister Amit Shah seeking intervention on states’ decision of allowing online retailers to sell non-essential items.
After the government announcement, CAIT Secretary General Praveen Khandelwal tweeted: "Seven crore traders of India express gratitude to PM Narendra Modi, Amit Shah, Rajnath Singh, PiyushGoyal and Hardeep Singh Puri for notification prohibiting E commerce to trade in non essential Commodities."
"In the current definition of what is essential and non-essential, about 93 percent of e commerce sale in India is non-essential," said Ankur Bisen. Senior Vice-President, retail and consumer products, Technopak.
Largely what e-commerce platforms sell is discretionary expenditure like electronics, fashion and general merchandise. "This means a loss of sale period of a month in this year (financial year) and a month in the next," he said.
Because of a general environment of economic slowdown, pay cuts and job losses, consumer sentiment is almost absent. A lifting of lockdown will not immediately revive it, till the economy doesn't pick up steam.
"So we will see consumers extinguishing desires for a foreseeable future. So e-commerce will have a significant impact. There will be a contraction in the overall sales number of e-commerce in FY21 compared to FY20," Bisen said.Follow our full coverage of the coronavirus outbreak here