Tata, Amazon express concerns over new rules for online retailers

Tata Group and American e-retailer firm Amazon Inc. both reportedly notified the Centre that plans for stringent rules for online retailers would significantly affect their business models.

Invest India, the government's investment promotion arm, and the consumer affairs ministry hosted the meeting. Many CEOs expressed their dissatisfaction with the proposed guidelines and requested an extension for submitting opinions by July 6, sources cited.

The Consumer Protection (e-commerce) Rules, 2020, announced on June 21, will be enacted upon consideration of industry inputs. The guidelines would tighten e-commerce laws, such as prohibiting related organizations from selling on platforms and limiting flash sales. The proposed rules might compel companies like Flipkart and Amazon to reconsider their business models and raise costs for domestic competitors such as BigBasket, Reliance Industries' JioMart, and Snapdeal.

Amazon contended that COVID-19 had already had a huge impact on small businesses and the proposed rules will significantly impact its sellers, claiming that some of the existing legislation already covered several sections.

As per the proposed guidelines, e-commerce firms must confirm that none of their affiliated businesses feature as merchants on their platforms. In particular, the impact is likely to be felt by Amazon as it has an indirect ownership in at least two of its sellers, Appario and Cloudtail.

Tata Sons representative stated the planned condition was difficult, mentioning that the group would have to stop Starbucks, which has a joint venture with Tata in India, from selling its products on Tata's marketplace website.

In this context, Piyush Goyal, the Indian commerce minister, mentioned the government would offer clarifications on foreign investment laws soon.

The new rules introduced last month come as a result of increasing complaints from India's brick-and-mortar shops that Flipkart and Amazon use complex business structures to dodge foreign investment rules. The businesses reject any wrongdoing on their part, citing knowledgeable sources.

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