E-commerce Giant Flipkart Forewarns Of Substantive ‘Customer Disruption’ If New India Rules Not Postponed

Key Highlights

In present’s amorphous zone of the internet, any restrictions or modifications on government policies directly affect the E-Commerce sector. The same dilemma is faced by Walmart Inc’s online Retailer Flipkart. 

According to India’s new foreign investment restrictions, effective from February 1, bar “E-Commerce companies from selling goods from firms in which they have an equity interest. The new rule also restricts e-commerce companies from approaching deals with sellers to only sell on one platform”.

In a letter to India’s industries department in earlier January, Flipkart Chief Executive Kalyan Krishnamurthy said the rules necessitate the company to assess “all elements” of its own business operations, accordingly to a person privy. He also aforementioned the regulations could cause “significant Customer disruption” if the deadline for compliance isn’t extended. He asked the Indian government to postpone the application of new rules for 6 months. But Indian officials notified that government is unlikely to reform the policy’s implementation date. The industry department declined to comment for this article.

The policy move has impingement Walmart, which has had done its biggest ever deal last year by investing $16 billion in Flipkart. This new rule has also astounded Amazon because it has committed $5.5 billion in India investments.

Industry courses also said that implementation of the new law will heroically shake e-commerce giants Flipkart and Amazon business and will force them to review their business arrangements in India. Companies have initiated working on approaching thousands of sellers on their platforms to ensure the companies comply with the regulations, three sources aware of the matter said. 

India’s minor traders had complained that large e-commerce companies used their control over inventory to create an unfair marketplace that allowed them to offer high discounts on some products. Such arrangements would be streaked under this new policy. 

The Flipkart in its letter mentioned the group has 80,000 employees and contractors and 500,000 to 600,000 shipments move daily. This new policy will affect its functioning majorly.

The company added that it wants to work with the federal government to promote “pro-growth policies” which can assist in developing the e-commerce sector. The U.S government has also put concern on this matter and told Indian officials to protect Amazon and Walmart investments in the country as Reuters report.

Updates of the Indian government in this concern are awaiting news for the e-commerce industry. Stay tuned with us for the updates.