With just 2 days to go, there appears to be very little scope for a change in the stand of the government.

Flipkart fears customer disruption if govt doesnt extend FDI compliance deadline
Atom Policy Wednesday, January 30, 2019 - 15:08
Written by  S. Mahadevan

The Indian government’s policy changes with regard to the way the e-commerce business is transacted in the country seems to have affected the two major players, Flipkart (now under Walmart’s management) and Amazon. In a report, Reuters said that Flipkart has now approached the Indian government to extend the deadline to comply with the new guidelines beyond February 1. The online retailer is said to have asked the government for a six-month extension to enable them to carry out changes in their arrangements with sellers on the platform.

The major point appears to be the stipulation that any entity on the platform cannot sell their goods if the owners of the e-commerce platform have invested in its equity. Flipkart possibly has more such sellers on its site. The other condition has irked major players is that sellers are not allowed to sell their goods on multiple platforms.

According to Reuters, Flipkart has warned the government that there could be major “customer disruptions” if this deadline does not get extended. With just 2 days to go and the government not blinking so far, there appears to be very little scope for a change in the stand of the government.

Both Flipkart and Amazon circumvented the foreign direct investment rules, which prevents them from directly selling on their e-commerce retail platforms. They floated entities in collaboration with local traders or businessmen, which would buy products in bulk on the B2B platforms owned by the e-commerce giants and sell them at huge discounts. This was brought to the notice of the government by the offline retail traders associations, claiming that these companies enjoyed an unfair advantage and were violating the policy by making a backdoor entry. This resulted in the government issuing this particular policy note on December 26.

The government’s stand is quite clear. It says it has not changed any policy, and has only reiterated what the old policy says. No new clause or condition has been introduced.

But Flipkart’s case is that because of the sheer number of sellers on their platform, which runs into thousands, it is time-consuming to ensure 100% compliance. They need to revisit the agreements they have entered into with each of their sellers and make revisions wherever required, and only then confirm that they have complied with the new notification.

All eyes on the Department of Industrial Policy and Promotion in the Ministry of Industry as the deadline nears its end.