New Delhi: As ecommerce regulations are tightened, fight between foreign companies Amazon, Flipkart and Indian companies Reliance, Tata Group is set to intensify.
Foreign brokerage, Jefferies said in a note, “The proposed rules now target indirect ownership in vendors, own label, flash sales. Fight between foreign cos (Amazon, Flipkart) & Indian cos (Reliance, Tata Grp) is set to intensify”.
India’s e-commerce industry faces complex regulations, the note said. While B2B & single brand retail have a stable framework, FDI in inventory-led e-comm. is prohibited. 100% FDI is allowed in the marketplace but regulations are evolving – 2018 rules pushed Amazon to reduce stake in a key seller.
In July-2020, new regulations were enacted with an intent to protect customer interest. However, in 2021, there have been amendments to those rules, still at a draft stage and open to public comments until 6-July — these are applicable to both Indian and foreign backed platforms, but seem more relevant for Amazon & Flipkart, based on our reading, Jefferies said.
Increase in the scope of related parties to now include a common chain of directors, more than 10% common ultimate shareholders, 5% shareholding in related entities etc.
In 2006, 51% FDI was allowed in single-brand retail which was made 100% in 2012 with some restrictions (30% local sourcing etc.).
Single brand retailers have also been allowed to run B2C e-commerce from 2015. In 2013, FDI was allowed in multi-brand retail (with some restrictions). However, the final approval was left to individual states and today, around 11 states and 1 Union Territory allow FDI, while the rest do not. E-commerce models.
In 2016, the e-commerce policy allowed 100% FDI in the marketplace but banned the Inventory-led model. Over the years, the marketplace regulations have evolved covering aspects like control over inventory and direct/ indirect investments in vendors. 2018 regulations.
