E-comm rules: Fight between Amazon, Flipkart vs Reliance, Tata to intensify

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 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 common chain of directors, more than 10% common ultimate shareholders, 5% shareholding in related entities etc.

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