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Regulatory guidelines may have significant impact for ecommerce.
In a move aimed at promoting fair trade in India, the government has announced a series of regulations for the ecommerce industry. From 1 February 2019, online marketplaces will not be allowed to list exclusive products on its platform. Previously, manufacturers and suppliers would work with Amazon or Flipkart exclusively to launch new products or promotions. This was especially common for smartphones and other consumer electronic items.
The new ruling states that online retailers must provide equal trading terms for all of its vendors and suppliers. Manufacturers and suppliers are now allowed to have a maximum of 25% of total online sales revenue from a single marketplace.
Another new regulation that will be introduced prevents foreign companies from selling its own products directly to shoppers. An example of a product to be impacted by this regulation would be Amazon’s Echo speaker. Under the new rules, this product will not be allowed for sale in the Amazon India site
Deep discounts offered by online retailers have badly affected many smaller businesses, making it difficult for them to compete effectively. By removing these entry barriers, the government hopes to encourage the growth of local mid and small enterprises.
Find out more information about the Indian market here.
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