HIGHLIGHTS
*The draft e-commerce policy has proposed that 'deep discounts' be stopped from a specified date to regulate the e-commerce sector
*The legislation will focus on consumer protection and grievance redressal to ownership, FDI, local storage of data and protecting micro, small and medium enterprises
NEW DELHI: Consumers fishing online for juicy deals may be in for a shock, as the government is mulling tightening the noose around “deep discounting”, a practice to lower prices on e-commerce platforms like Amazon and Flipkart.
The draft e-commerce policy, shared with stakeholders on Monday for consultations, has proposed that such pricing policy be stopped from a specified date to regulate the sector. The policy, the first of its kind for the booming segment, has proposed legislation that will also cover food delivery sites such as Swiggy and Zomato, online service aggregators like UrbanClap as well as platforms offering financial and payment products such as Paytm and Policybazaar.
The plan is to include multiple aspects in the legislation — from consumer protection and grievance redressal to ownership, FDI, local storage of data, protecting micro, small and medium enterprises and mergers and acquisitions. The draft, which will undergo a revision before public consultations, has also suggested appointing a regulator for the sector. The Indian e-commerce market is estimated to be worth around $25 billion and is projected to touch $200 billion in a decade.
The intense activity in the sector has prompted global investors such as Softbank, Walmart, Alibaba, Tiger Global and Tencent to invest in Indian e-commerce outfits, driving up valuations. The grievance redressal mechanism will also regulate companies that have their own e-commerce platforms. A special policy is also envisaged for companies set up by Indians and selling 100% made-in-India goods. Unlike the current regime where e-commerce is done through a “marketplace” or a platform where others sell, the new dispensation will allow an “inventory-based” model where the companies will be directly selling to consumers with up to 49% FDI allowed in this segment.
A key element of the draft policy that will affect consumers is the plan to check discounts, something that offline retail lobbies have been pitching for. While the e-commerce companies officially say that sellers offer discounts and not the online marketplaces, executives acknowledged that there was an element of discounts, which resulted in the massive cash infusion to sustain the operations.