This new year might see attractive online discounts fizzling out

New rules to be framed by the government that might bring down curtains on lucrative deals and offers given by ecommerce players.

Attractive discounts and offers to customers from online marketplaces might become a thing of the past, as the government is planning to impose restrictions on ecommerce players offering deep discounts, media reports quoting sources said on Tuesday.

The development comes a day after Commerce and Industry Minister Suresh Prabhu told in the Lok Sabha about government considering the formulation of ecommerce policy, but for which no timeline is fixed.

The Minister also expressed hinted about the ecommerce companies using their size and position in the retail market unfairly. He said,

“Competition Act lays down the framework for regulating anti-competitive agreements, including vertical restraints. The conduct of certain e-commerce players who enjoy a position of dominance in the relevant market may also be brought under the radar of Indian competition law if they abuse their dominant position.”

India’s offline retailers have long been complaining about unfair competition and lack of level playing field from large ecommerce companies like Amazon, Flipkart, Paytm and others who have access to huge cash reserves. Trade bodies such as Confederation of All India Traders and All India Online Vendors Association have suggested to the government to check heavy discounting from online sellers.

A PTI report quoted CAIT’s secretary general Praveen Khandelwal, as saying, “We have recently met officials of the ministry, who are making the new e-commerce policy. We have urged to put certain clauses to check e-commerce firms giving huge discounts and freebies as it is damaging the trade fabric of the country.”

While Flipkart group received its third fund infusion by the parent into its subsidiary, that together takes the total infusion in this financial year to Rs 6,105 crore. In FY 2018, Flipkart and its rival US-based Amazon have pumped in over Rs 14,000 crore into their various Indian subsidiaries.

It might also be noted that the draft policy that was abandoned after being shared with industry and stakeholders earlier this year, had proposed a sunset clause to address anti-competitive issues. A report by NASSCOM and PwC said that the Indian ecommerce market, which is at present $35 billion, would grow to over $100 billion by 2022.