No restrictions on sale of pvt labels by e-marketplaces, says govt

Chennai: It seems e-commerce majors have successfully gotten under the skin of the government over the course of the New Year as the Department of Industrial Policy & Promotion (DIPP) has now stated that there are no restrictions on private labels being sold by e-marketplaces.

The sharp reversal of policy by the Centre comes just a week after the government had restricted such sales and got some flak for it as well.

“An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” DIPP had earlier said in a press note.

However, now, it has clarified, stating, “Concerns have been raised that press note 2 (2018) prohibits sale of private label products through the marketplace. It is clarified that the present policy does not impose any restriction on the nature of products which can be sold on the marketplace.”

Misleading?

The new guidelines were hailed by trader’s bodies as the order had tightened regulations in the sector owned by foreign direct investment (FDI) players, by barring flash sales, deep discounts, and mandated annual norm compliance submissions to the Reserve Bank of India.

The two largest e-marketplaces, Amazon India and Flipkart currently have 30 private labels covering 200 different categories and together, they have spent $1.5 billion in the country to expand their private labels. The news had come as a blow to the two giants.

Meet with the govt

It has been reported that e-commerce firms, taking the help of industry bodies such as the Confederation of Indian Industry and Federation of Indian Chambers of Commerce & Industry are expected to have a meet with the government soon.

It is expected that investment giants such as SoftBank, Tiger Global, Sequoia, and Naspers will be present at the meet as well. Reports have stated that the parties may meet on 11 January with the Internet and Mobile Association of India, taking the lead in discussions.

CAIT not amused
The move has elicited severe criticism from domestic trader bodies, particularly the Confederation of All India Traders (CAIT).

“The new press note is explicit. E-commerce companies with FDI can¬ít sell their own goods, which means private labels are not allowed. The new clarification note is a simple stupid confusion or losing guts and backtracking,” national secretary general of the body, Praveen Khandelwal has stated.

It must be moted that CAIT members had met the Commerce Minister earlier and were reportedly assured of a stronger e-commerce policy that favour Indian players.

Praveen Kumar S