The Indian government is evaluating the option of banning connected entities or related companies of internet marketplaces from offering goods or services to registered dealers on their online portals. The Ministry of Consumer Affairs is heading the conversations, with The Department for Promotion of Industry and Internal Trade (DPIIT) and The Ministry of Electronics and Information Technology (MeitY) joining in on the inter-ministerial deliberation. This proposed measure may impede e-commerce giants such as Flipkart and Amazon India, and food delivery services from providing ancillary services to merchants like internal logistics & payment products.
Praveen Khandelwal, Secretary General of the Confederation of All India Traders, shared that e-commerce vendors are enabled to work as a link between consumers and suppliers in an exclusively digital portal. However, they aren’t authorized to market any items on their web page, including those of their own. However, he claims that these companies have been controlling inventory through related party sellers and creating a complex web of preferred sellers and service providers, who receive preferential treatment in the form of low or zero commission charges, platform fee, faster delivery, payment discounts, and prominent visibility on the marketplace, among other benefits. In order to close the gap between classes and achieve equality, the government is considering this move of removing inequality to create a fair playing field for all.
In order to protect consumers from being tricked or misled by online merchants, the government implemented a comprehensive framework last year which tightened regulations around e-commerce platforms. Such measures help to reduce the presence of fake and deceptive reviews on such sites. The recently publicized e-commerce regulations in 2021 put an emphasis on the importance of e-commerce firms to guarantee that none of their affiliates or connected companies are represented as vendors on their websites. According to the newly suggested regulations, it’s forbidden for any related entity to vend their products on the same platform as an online seller.
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The Indian government has reportedly proposed certain regulations that may affect the functioning of e-commerce giants Flipkart and Amazon. The two companies are heavily reliant on services such as Ekart and Amazon Transportation Services for delivering orders, so any changes brought about by the regulations can have a major impact on their operations. Discussions regarding this issue are still in progress and the extent of enforcement and implications of these regulations on India’s e-commerce sector remain uncertain. We will have to wait to see what effect this legal framework brings about in the future.
