Amazon and Flipkart face hit from India’s new ecommerce rules

New Delhi seeks to limit foreign players by restricting their hold on inventories

India has announced strict new rules for foreign-owned ecommerce companies that could cause fresh headaches for Amazon and Walmart

India has announced strict new rules for foreign-owned ecommerce companies that could cause fresh headaches for Amazon and Walmart

 

India has announced strict new rules for foreign-owned ecommerce companies that could cause fresh headaches for Amazon and Walmart even after they have invested billions of dollars to develop their local businesses.

The rules, which are due to take effect on February 1st, will prohibit foreign companies that are running ecommerce marketplaces – such as Walmart-owned Flipkart and Amazon’s Indian site – from selling goods sold by businesses in which they hold equity stakes.

The regulations also state that ecommerce platforms may not “directly or indirectly influence the sale price of goods and services” – a condition that could put an end to the blockbuster seasonal sales promotions that have helped drive rapid growth and become national events.

The rules are intended to appease India’s multitude of small businesses, an important electoral constituency, which has long complained that the platforms give preferential treatment to their partners. They argue that this has created unfair competition and made it difficult for them to challenge large, deep-pocketed ecommerce rivals. – Copyright The Financial Times Limited 2018