As ecommerce regulations are tightened, fight between foreign companies Amazon, Flipkart and Indian companies Reliance, Tata Group is set to intensify.<\/p>\n
Foreign brokerage, Jefferies said in a note, “The proposed rules now target indirect ownership in vendors, own label, flash sales. Fight between foreign cos (Amazon, Flipkart) & Indian cos (Reliance, Tata Grp) is set to intensify”.<\/p>\n
India’s e-commerce industry faces complex regulations, the note said. While B2B & single brand retail have a stable framework, FDI in inventory-led e-comm. is prohibited. 100% FDI is allowed in marketplace but regulations are evolving – 2018 rules pushed Amazon to reduce stake in a key seller.<\/p>\n
In July-2020, new regulations were enacted with an intent to protect customer interest. However, in 2021, there have been amendments to those rules, still at a draft stage and open to public comments until 6-July — these are applicable to both Indian and foreign backed platforms, but seem more relevant for Amazon & Flipkart, based on our reading, Jefferies said.<\/p>\n
Increase in the scope of related parties to now include common chain of directors, more than 10% common ultimate shareholders, 5% shareholding in related entities etc.<\/p>\n
Related party, as defined above, cannot become a seller on the platform and also cannot do anything that e-commerce entity itself cannot do.<\/p>\n
Marketplace cannot sell goods or services to any vendor on its platform. “Marketplace name or brand cannot be used for the product – ‘Amazon’ Alexa for example, in our view; \u0095 Marketplace subject to fallback when vendor fails to perform; flash sale favouring certain vendors only is not allowed etc”, the note said.<\/p>\n
Amazon started in 2013 as a marketplace but faced issues on FDI. In 2014, Amazon entered into a partnership with Catamaran Mgmt. Services (promoted by Infosys co-founder Narayana Murthy), which owned 51% while Amazon owned 49% in Prione Business which owned Cloudtail India, the key vendor on Amazon India platform. However, the 2018 regulation pushed Amazon to reduce its stake to 24% with Catamaran now at 74%.<\/p>\n
FDI in any form of retail was banned in India until 1996. However, 100% FDI was allowed in wholesale cash & carry in 1997 which was also extended to B2B e-commerce in 2000.<\/p>\n
In 2006, 51% FDI was allowed in single-brand retail which was made 100% in 2012 with some restrictions (30% local sourcing etc.).<\/p>\n
Single brand retailers have been also been allowed to run B2C e-commerce from 2015. In 2013, FDI was allowed in multi-brand retail (with some restrictions). However, the final approval was left to individual states and today, around 11 states and 1 Union Territory allow FDI, while rest do not. E-commerce models.<\/p>\n
In 2016, the e-commerce policy allowed 100% FDI in marketplace but banned the Inventory-led model. Over the years, the marketplace regulations have evolved covering aspects like control over inventory and direct\/ indirect investments in vendors. 2018 regulations.<\/p>\n
The industry managed to create alternate structures in order to adhere to the regulations until 2017. This prompted lawmakers in 2018 to tighten their grip by restricting: a) control over inventory which covered cases where a vendor buys more than 25% of its products directly or indirectly (group firms of marketplace); b) direct or indirect ownership in vendor; c) level playing field & no preference to any vendor; d) no exclusive partnerships with vendors.<\/p>\n","protected":false},"excerpt":{"rendered":"
As ecommerce regulations are tightened, fight between foreign companies Amazon, Flipkart and Indian companies Reliance, Tata Group is set to intensify. Foreign brokerage, Jefferies said in a note, “The proposed rules now target indirect ownership in vendors, own label, flash sales. Fight between foreign cos (Amazon, Flipkart) & Indian cos (Reliance, Tata Grp) is set to intensify”. India’s e-commerce industry faces complex regulations, the note said. While B2B & single brand retail have a stable framework, FDI in inventory-led e-comm. is prohibited. 100% FDI is allowed in marketplace but regulations are evolving – 2018 rules pushed Amazon to reduce stake […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-798682","post","type-post","status-publish","format-standard","hentry","category-it-2"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/798682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=798682"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/798682\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=798682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=798682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=798682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}