Amazon, Tata tells Centre that new e-commerce rules will derail their business

New Delhi: Amazon and Tata Group warned the Indian government on Saturday that imposing stricter rules on online retailers would have a significant impact on their business models, sources told Reuters.

While expressing concerns and confusions over the new proposed rules, online retailer's executives requested the government for an extension for submitting comments, sources told. A meeting was organised by the Consumer Affairs Ministry of India and Invest India, the government's investment promotion branch, where the retailers' representatives discussed with government officials.

The new rules proposed by the Union government on June 21 regarding e-commerce aimed to strengthen and protect consumers. But the said rules have raised concern among the online retailers running in the country, notably Amazon and Walmart's Flipkart. The new rules include limiting flash sales, barring misleading ads and directing a complaint system that could force most online retailers to review their business structures. Also, this might increase the expenditure of domestic retailers like Reliance Industries' JioMart, BigBasket and Snapdeal.

According to the sources, Amazon argued about how the pandemic had already hit small businesses, and the proposed rules will hit its sellers again. Also, some clauses were already covered by existing law, it added.

The proposed policy also states that e-commerce firms must not add any of their related enterprises as their sellers, which could be another snag for Amazon as it holds an indirect stake in Cloudtail and Appario; both are listed as sellers in its e-store. Regarding the same proposal, Tata Sons argued that Starbucks could not offer their products under this condition as the duo has a joint venture in India. Tata further said that the rules would create larger consequences for it as it would resist sales of its private brands.

The Ministry representative retorted that the proposed rules are for consumers' sake and are not as stringent as in many other countries. Meanwhile, the Reliance representative agreed that the proposed rules would empower consumers but requested clarification on specific clauses.

The Ministry, Tata Group or Reliance did not respond to Reuters request for comment.