New e-commerce rules would affect businesses, according to Amazon and Tata

The government’s severe new e-commerce guidelines, which were unveiled on June 21 and meant to increase consumer protection, have alarmed the country’s online businesses.

According to four sources familiar with the negotiations, Amazon Inc and India’s Tata Group informed officials on Saturday that plans for harsher rules for online retailers would have had a significant effect on business strategies.

In a meeting which was organised by the Consumer Affair Ministry and the Govt. Investment Promotion arm, Invest India, many of the executives had expressed their issues and the confusion which they had over the newly introduced rules and asked that on July 6 only they are having the deadline for submitting of comments be extended, according to the sources.

As the government had announced the new tough e-commerce rules on June 21, which aimed at strengthening the protection for the consumers, have caused a concern among the country’s online retailers (sellers) and notably the market leaders like Amazon and Walmart.

The new rules put the limitations on the flash sales, barring of misleading the advertisements and mandating the system of complaints, now Amazon and Flipkart will have to review their business structures and may increase the costs for domestic rivals which include Reliance Industries – JioMart, BigBasket, Snapdeal etc.

According to the proposed guideline, e-commerce companies must verify that neither of their affiliated businesses are featured as merchants on their platforms. Because Amazon owns an indirect ownership in at least a couple of its sellers, Cloudtail and Appario, this could have an impact on Amazon.

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