InvestorQ : What is the gist of the new Ecommerce Policy and why are the online ecommerce players unhappy with the same?
Dawn Cherian made post

What is the gist of the new Ecommerce Policy and why are the online ecommerce players unhappy with the same?

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Mitali Bhutta answered.
4 weeks ago
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The draft Ecommerce Policy Document is likely to be discussed in the next few days and a final policy is likely to be emerge. This is largely a direct outcome of the constant criticism of the apparently dubious business practices followed by a number of large and prominent ecommerce players like Amazon and Wal-Mart while operating in India.

One objection that most people have said time and again is that these ecommerce platforms constantly flout Federal regulations. In short, these ecommerce platforms give preferential treatment to a group of sellers on its India platform and used them to circumvent FDI rules. For example, Cloudtail used to account for nearly 40% of total sales of Amazon, which is not down to 25% as per statutory requirements.

However, such structures continue to be used to circumvent FDI rules and rules pertaining to seller discrimination. The new Ecommerce policy has called for such platforms to be impartial in their dealings with sellers. As of now it is only a draft policy and it will be a rule only after necessary approvals are in place.

Most offline Indian traders had also complained about steep discounts offered by online companies. Such large players like Amazon and Wal-Mart have access to cheap capital globally and they use this capital cushion to offer huge discounts to the customers. That is something, obviously, Indian traders are not able to match.

For example, one area where retailers are finding it tough to match the e-tailers is mobile phones. As a result of these discounts, the share of online sales mobile phones has gone up from 10% in 2015 to almost 50% today. The draft calls for transparent policies on discounts and treats all sellers in a fair and transparent manner.

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