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.
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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