Government’s latest rules for foreign e-commerce platforms may be designed to protect local companies from Amazon and Walmart, but consumers are likely to suffer the collateral damage. Online marketplaces must treat all vendors equally by providing the same terms, the commerce ministry said Wednesday.
In practice, this means barring e-commerce companies from forcing a seller to feature products exclusively on their platforms, and limiting ownership or control over the marketplace’s inventory. The government says the changes will promote fair trade and curb foreign companies’ influence in setting domestic prices.
This could mean that platforms offered by e-commerce giants such as Amazon and Walmart’s Flipkart may be prohibited from offering their own goods – such as the Echo smart speaker – at heavy discounts, while allowing rivals the opportunity to sell previously proprietary products.
“Consumers in India will most likely bear the brunt of these changes and be negatively impacted,” said Jennifer Bartashus, a retail industry analyst for Bloomberg Intelligence. “Prices will go up as discounts evaporate, and product options and availability may contract as e-commerce marketplaces strive to remain compliant with the new rules.”
Amazon and Flipkart will make presentations before the finance and commerce ministries to contest the new rules, local news channel BTVI said in a Twitter post, citing unidentified people.