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India’s New E-Commerce Rules Considered ‘Cause for Concern’ by US Lobby Group, Email Shows

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A top lobby group that is essential for the US Chamber of Commerce believes India’s proposed new e-commerce rules are a cause for concern and will lead to a stringent operating environment for companies, as per an email reviewed by Reuters.

India this week spooked online retailers like Amazon and Walmart’s Flipkart by laying out plans to restrict “flash sales”, reining in a private label push, and ordering them to have a system to address grievances.

Washington-headquartered US-India Business Council (USIBC)

The Washington-headquartered US-India Business Council (USIBC), of which Amazon and Walmart are members, described the rules as concerning in an internal email, saying some provisions were in line with New Delhi’s stance on other huge computerized companies.

India’s draft plan “includes several concerning policies, remembering significant limits for platforms’ capacity to organize sales and handle grievances,” USIBC said in an email to its members.

USIBC has in the past urged India not to tighten a separate set of rules

USIBC has in the past urged India not to tighten a separate set of rules governing foreign investment in companies like Amazon and Flipkart, an issue that has often soured trade relations between India and the United States.

USIBC didn’t immediately respond to a request for comment.

The new rules – open for consultation until July 6 – are expected to have an effect across the board in an online retail market forecast to be valued at $200 billion (generally Rs. 14,84,650 crores) by 2026.

They will also apply to Indian firms like Tata’s BigBasket and Reliance Industries’ JioMart, however, the proposal comes after Indian retailers for quite a long time complained that market leaders Amazon and Flipkart used complex business structures to bypass India’s foreign investment law, harming small businesses.

The companies deny any bad behavior.

India’s new proposed rules have raised concerns they will force Amazon and Flipkart to review their business structures, industry sources and lawyers have told Reuters.

The USIBC email noted that India’s proposals “preclude (e-commerce) platforms from claiming vendors”.

Amazon specifically holds an indirect stake in two of its top sellers

Amazon specifically holds an indirect stake in two of its top sellers and a Reuters investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers.

India’s rules also will force e-commerce companies to reveal the nation of the beginning of an item and suggest alternatives to ensure a “reasonable freedom for domestic goods”.

Some of the new provisions line up with India’s similar federal policies “for social and computerized media companies … furthermore, will result in a more stringent e-commerce regime,” USIBC said in its email.

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