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Online Vendors Group Pushes For EU-Style Ecommerce Laws in India

Online Vendors Group Pushes For EU-Style Ecommerce Laws in India

Smaller sellers are asking for greater transparency in digital markets

EU also released similar rules to halt online malpractices this month

India’s new FDI ecommerce rules came into effect on Feb 1

All India Online Vendors Association (AIOVA), a pan-India group of vendors who supply merchandise to ecommerce platforms, , have reached out to the Department for Promotion of Industry and Internal Trade (DPIIT), asking  for stricter ecommerce regulations to prevent companies from arbitrarily changing business terms and taking down seller accounts.

Sellers have also demanded more clarity on how Amazon and Flipkart rate sellers along with a exhaustive disclosure on the ranking parameters used by these ecommerce platforms.

The 3,500 sellers strong association demands are similar to the European Union’s ‘digital single market’ rules which were agreed on February 14. The EU’s rules stipulate similar transparency laws and seek to curtail sudden changes in business terms between sellers and marketplaces.

“Platforms have a free hand to conduct their business. This is leaving a lot of issues unresolved and lot of businesses being affected due to unreasonable blacklisting, data glitches, and absence of appealing and frequent changes in policies. We need ease of business while conducting business on platforms,” the group told Inc42.

The new FDI ecommerce guidelines are centered around promoting domestic players and curbing the deep discounting policies of ecommerce players. The rule also mandated that ecommerce marketplaces cannot give exclusive status to certain sellers.

Since their rollout on February 1, the guidelines have caused quite a stir for major ecommerce players. Amazon Asia reduced its stake in Cloudtail to 24% from the earlier 49%. The ecommerce giant also reduced its commission charges for the use of its services to attract more independent sellers and present itself as a friendly marketplace.

Since the new FDI rules, Amazon and Walmart (which owns Flipkart) have together lost $50 Bn in market capitalisation. According to a Crisil report, 35-40% of e-retail industry sales, amounting to $4.89 Bn – $5.6 Bn (INR 35K Cr to INR 40K Cr) could be impacted due to the tightened policy.