Draft e-commerce policy: Amazon, Flipkart, Paytm may face problem offering hefty discounts
BusinessToday.In July 31, 2018
As the government's draft e-commerce policy bats for equal footing for domestic and international players, there will be one aspect that will be largely impacted - discounts. Needless to say, sites that offer the hottest discounts attract more customers resulting in all the bigwigs rolling out hefty offs. In an attempt to boost Indian online enterprises, the government is proposing that deep-rooted discounts be stopped from a particular date as part of the e-commerce policy draft. Deep discounting is an usual strategy to lower prices practised by giants like Amazon and Flipkart.
This is also a move that has been lobbied by online retailers for a while now who want discounts to be under check. Discounts have been steadily steering people away from offline retailers to e-commerce sites. E-commerce companies' official stand is, however, that these discounts are levied by sellers and not the online sellers.
This strategy is part of the government's proposal to boost Indian e-commerce players without violating international trade agreements. The government is proposing to give Indian players certain incentives as well and further exploring if internet giants could back local companies and give them preference on the website.
In this context, an Indian entity is defined as a firm where foreign investment does not exceed 49%, where the founder/promoter is an Indian and where the platform company is controlled by Indian management. Moreover, the draft will not only impact e-commerce companies, but also food delivery such as Swiggy, Zomato, finance and payments like Paytm, PolicyBazaar and aggregators like UrbanClap.
There will also be a special policy for companies set up by Indians, selling 100% Indian goods. The new system will also allow an "inventory-based model" where companies could directly sell to consumers.
The draft will come into play with a range of checks from FDI, local storage of data, grievance redressal to protection of consumers and small and medium enterprises.
The e-commerce policy draft is also inclining towards simplified GST procedures by allowing centralised registration instead of local registration and requirements for each place of business.