Yesterday, we learned that India is going to ban flash sales on e-commerce platforms. Also, it will not allow related affiliated entities of e-commerce platforms to become sellers. Once this happens, India will further tighten its e-commerce policy.
New e-Commerce Policy In India
The proposal was submitted by the Ministry of Consumer Affairs of India on Monday. E-commerce platforms such as Amazon and Flipkart are conquering in big Indian cities. Indian brick-and-mortar retailers complain of unfair competition by their opponents. The Ministry of Consumer Affairs of India believes that e-commerce companies should be prohibited from rushing to sell products for a limited time. The so-called limited-time buying is similar to “Black Friday” and “Cyber Monday” in the United States. This simply means discounts and promotions for a period of time, when sales tend to soar.
The Ministry of Consumer Affairs of India issued a statement: “Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller selling on platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back’ order with another seller controlled by platform. This prevents a level playing field and ultimately limits customer choice and increases prices.”
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In addition, the Ministry of Consumer Affairs of India also recommends that e-commerce companies set up the position of “Chief Compliance Officer”. It should also set up a contact person to keep in touch with law enforcement agencies 24/7. Also, it must arrange for special personnel to implement government orders. On the other hand, they should set up a resident complaint officer to handle consumer complaints. India has adjusted its regulations before and put forward similar requirements on social platforms.
In order to verify identities and to prevent, detect, investigate, and report criminal acts or cybersecurity incidents under the current laws, if the government requires e-commerce platforms to provide relevant information, they should be provided within 72 hours.
Why India Has Decided To Tighten The Rules?
If the Indian government approves the proposal, Amazon, Flipkart and other e-commerce platforms may not be able to operate their own brands. We mean the proposal requires e-commerce companies to ensure that no related or affiliated parties become sellers on the platform that directly sell products to customers. In India, e-commerce companies cannot have inventory and cannot sell products directly to consumers. In order to circumvent the ban, foreign e-commerce companies will cooperate with local Indian inventory companies. (And we guess this is the main idea behind this initiative.)
At last, the proposal requires e-commerce platforms to come up with a plan. The latter allows consumers to quickly find products based on their origin. India is doing this to “ensure fair opportunities for domestic products”. In the next 15 days, the Ministry of Consumer Affairs of India will seek industry advice on the proposal.
