At a meeting organised by the consumer affairs ministry and
the government's investment promotion arm, Invest India, many executives
expressed concerns and confusion over the proposed rules and asked that the
July 6 deadline for submitting comments be extended, said the sources.
The government's tough new e-commerce rules announced on
June 21 aimed at strengthening protection for consumers, caused concern among
the country's online retailers, notably market leaders Amazon and Walmart Inc's
(WMT.N) Flipkart.
New rules limiting flash sales, barring misleading
advertisements and mandating a complaints system, among other proposals, could
force the likes of Amazon and Flipkart to review their business structures, and
may increase costs for domestic rivals including Reliance Industries' (RELI.NS)
JioMart, BigBasket and Snapdeal. read more
Amazon argued that COVID-19 had already hit small businesses
and the proposed rules will have a huge impact on its sellers, arguing that
some clauses were already covered by existing law, two of the sources said.
The sources asked not to be named as the discussions were
private.
The proposed policy states e-commerce firms must ensure none
of their related enterprises are listed as sellers on their websites. That
could impact Amazon in particular as it holds an indirect stake in at least two
of its sellers, Cloudtail and Appario.
On that proposed clause, a representative of Tata Sons, the
holding company of India's $100 billion Tata Group, argued that it was
problematic, citing an example to say it would stop Starbucks (SBUX.O) - which
has a joint-venture with Tata in India - from offering its products on Tata's
marketplace website.
The Tata executive said the rules will have wide
ramifications for the conglomerate, and could restrict sales of its private
brands, according to two of the sources.
Tata declined to comment.
The sources said that a consumer ministry official argued
that the rules were meant to protect consumers and were not as strict as those
of other countries. The ministry did not respond to a request for comment.
A Reliance executive agreed that the proposed rules would
boost consumer confidence, but added that some clauses needed clarification.
Reliance did not respond to request for comment.
The rules were announced last month amid growing complaints
from India's brick-and-mortar retailers that Amazon and Flipkart bypass foreign
investment law using complex business strcutures. The companies deny any
wrongdoing.
A Reuters investigation in February cited Amazon documents
that showed it gave preferential treatment to a small number of its sellers and
bypassed foreign investment rules. Amazon has said it does not give favourable
treatment to any seller.
The government will soon issue certain clarifications on the
foreign investment rules, Indian commerce minister Piyush Goyal told reporters
on Friday. -Reuters