{"id":4091,"date":"2019-08-19T22:32:59","date_gmt":"2019-08-19T17:02:59","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=4091"},"modified":"2019-08-19T22:32:59","modified_gmt":"2019-08-19T17:02:59","slug":"level-the-playing-field-for-online-vendors","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/level-the-playing-field-for-online-vendors\/","title":{"rendered":"Level the playing field for online vendors:"},"content":{"rendered":"<p><strong>Relevance: mains: G.S paper III: Indian Economy<\/strong><\/p>\n<p><strong>Context<\/strong><\/p>\n<ul>\n<li>Tighter rules governing e-commerce platforms notified by the government this week are designed to level the playing field for all vendors in an online marketplace.<\/li>\n<li>These impose restrictions on related-party transactions, preferential treatment to suppliers, and inventory dumping.<\/li>\n<\/ul>\n<p><strong>Background of the announcement<\/strong><\/p>\n<ul>\n<li>The government had announced the foreign direct investment (FDI) policy for the sector in 2016, during which US retail giants Amazon and Walmart came to occupy a commanding position in India\u2019s $41-billion e-commerce industry.<\/li>\n<li>Indian brick-and-mortar retailers have grown restive, claiming online marketplaces like Amazon and Flipkart have acquired the power to influence retail prices, in contravention of the policy that restricts FDI in business-to-consumer (B2C) e-commerce, but not in business-to-business (B2B).<\/li>\n<li>The government appears to have bought this argument and the new set of rules are meant to give effect to the original e-commerce policy even as inter-ministerial consultations are on for drawing up a new one.<\/li>\n<\/ul>\n<p><strong>Battle for online marketplace<\/strong><\/p>\n<ul>\n<li>India is a crucial battleground for Amazon and Walmart they have committed a combined $21 billion to this market and they may now have to review their business operations in the country.<\/li>\n<li>Amazon has several joint ventures, including Cloudtail and Appario, that may be affected by the restrictions on sales by related parties.<\/li>\n<li>Flipkart has exclusive partnerships with smartphone brands like Xiaomi and Oppo that could, in turn, face a ban on exclusive deals for products.<\/li>\n<li>Both offer promotional schemes such as cashbacks and faster delivery, which are now deemed discriminatory.<\/li>\n<li>The companies will now have to furnish reports to the Reserve Bank of India annually, adding another dimension to compliance and monitoring of the e-commerce industry.<\/li>\n<li>Flipkart and Amazon can thus be reasonably expected to push back against rules they find too constrictive, given the size of their investments in the ecosystem that fuels e-commerce on this scale.<\/li>\n<\/ul>\n<p><strong>Way forward<\/strong><\/p>\n<ul>\n<li>The government, on its part, is clear that the new rules are needed to prevent anti-competitive behaviour in the e-commerce industry.<\/li>\n<li>An online marketplaces should not have any role in determining the prices of the products sold on their platforms.<\/li>\n<li>As regulator, it cannot avert its gaze from market distortions, even if the latest rules do not fit snugly into the country\u2019s competition law, which proscribes only a select segment of exclusive arrangements that have a demonstrably significant effect on market freedom.<\/li>\n<li>The focus should be on establishing specific arrangements that create barriers to new entrants.<\/li>\n<li>The extra load on auditors is, however, a small price to pay in the larger interest of transforming India\u2019s retail sector into<br \/>\na modern industry.<\/li>\n<li>E-commerce provides India\u2019s army of medium and small enterprises one of their least-cost options to sell their wares, and the government\u2019s approach of encouraging online marketplaces with due safeguards cannot be faulted.<\/li>\n<li>But the regulatory reflex must be tempered by the realization that a ramshackle retail sector is not in the interests of consumers or producers.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: mains: G.S paper III: Indian Economy Context Tighter rules governing e-commerce platforms notified by the government this week are<\/p>\n","protected":false},"author":1,"featured_media":3299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[42,43],"tags":[392],"class_list":["post-4091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/4091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=4091"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/4091\/revisions"}],"predecessor-version":[{"id":4092,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/4091\/revisions\/4092"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3299"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=4091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=4091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=4091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}