More pain in save for Amazon, Flipkart

The authorities have currently launched a draft country-wide comprehensive e-trade coverage, slightly two months after the Department for Promotion of Industry and Internal Trade (DPII) came out with a notification on guidelines for e-commerce marketplaces.

In this manner, e-commerce marketplaces (ECM), including Amazon and Flipkart, that have already been feeling the warmth, may want to have a brand new set of compliances coming their way.

Clauses and their implications: Data localization

Business models of ECM are extensively targeted at records. Key factors amassed in India by way of ECM are used by their foreign-based parent companies (i.e., Amazon Inc. for Amazon India, Softbank for Flipkart) to make decisions on the next fronts:-

– Amount of funding to be infused periodically in ECMs
– Terms of engagement of ECM with customers
– Product/brand launches, changes, and withdrawals to be undertaken
– Investments in retail and logistical infrastructure

Unlike ECMs, small unorganized outlets don’t have to get the right to such records and can not invest closely in technological infrastructure because of restricted resources. Leakage and switch of sensitive information could also divulge Indian markets to possibly alternate manipulation by way of global gamers (together with exchange bodies, exporters, and conserving groups of ECMs, amongst others).

The draft states that ECM wouldn’t be capable of percentage records with third parties (even supposing a purchaser consents to it) or with overseas stakeholders (except authorized by the Indian authorities).

If a customer’s facts are accumulated in advance, complete disclosure concerning the customer’s wishes is to be made via the ECM on its interface. Simultaneously, ECM should address safety concerns relating to such records.

By the distinctive feature of those norms, ECM would be staring at a boom in compliance costs. It might not be easy to pass those on to the buyers, considering the high competitive depth in retail.

Supply chain transparency

ECM needs to ensure that every product shipment from other international locations to India is undertaken via the customs path. The draft presents for integrating Customs, RBI, and India Post structures to improve monitoring of imports. Additionally, ECM has to have a registered commercial enterprise entity in India (to be the importer on record) through which sales are transacted regionally. Such regulations will decrease tax/regulatory loopholes.

Supplier and product authenticity

ECMs ought to publicly disclose all relevant info of companies (that use the ECM’s platform to promote products). Vendors might be required to supply a venture of the genuineness of products to the ECMs, which must also be on hand to consumers. Vendors who fail to achieve this cannot have their merchandise listed at the ECM.