NEW DELHI: Amazon.com Inc and India’s Tata Group warned government officials on Saturday that plans for tougher rules for online retailers would have a major impact on their business models, four sources familiar with the discussions told Reuters.
At a meeting organized by the consumer affairs ministry and the government’s investment promotion arm, Invest India, many executives expressed concerns and confusion over the proposed rules and asked that the July 6 deadline for submitting comments be extended, said the sources.
The government’s tough new e-commerce rules announced on June 21 aimed at strengthening protection for consumers, caused concern among the country’s online retailers, notably market leaders Amazon and Walmart Inc’s Flipkart.
New rules limiting flash sales, barring misleading advertisements and mandating a complaints system, among other proposals, could force the likes of Amazon and Flipkart to review their business structures, and may increase costs for domestic rivals including Reliance Industries’ JioMart, BigBasket and Snapdeal.
Amazon argued that COVID-19 had already hit small businesses and the proposed rules would have a huge impact on its sellers, arguing that some clauses were already covered by existing law, two of the sources said.
The sources asked not to be named as the discussions were private. The proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular as it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.
On that proposed clause, a representative of Tata Sons, the holding company of India’s $ 100 billion Tata Group, argued that it was problematic, citing an example to say it would stop Starbucks – which has a joint-venture with Tata in India – from offering its products on Tata’s marketplace website.
The Tata executive said the rules will have wide ramifications for the conglomerate, and could restrict sales of its private brands, according to two of the sources. Tata declined to comment.