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Online vendors body seeks govt help for monitoring e-commerce merchant policies

The All India Online Vendors Association (AIOVA) has again urged the government to set up a regulatory body to monitor e-commerce players and their merchant policies, reports PTI.

The urge comes on the back of recent Walmart-Flipkart $16 Billion deal, where US giant Walmart has picked 77% stakes in Flipkart. In a media statement, AIOVA said that it has been demanding a regulatory body to monitor the trade of e-commerce marketplaces and their policies towards sellers. “We had made this demand in the E-commerce Committee formed under Niti Aayog in the year 2016 where we were assured they will immediately start working on it,” the statement reads.

Besides that AIOVA also complains that the government has not taken them in the account in the process of chalking out a framework for National E-commerce Policy. AIOVA represents about 3,500 sellers present on various e-commerce platforms like Flipkart, Amazon and Snapdeal.

AIOVA and other trader bodies including Swadeshi Jagran Manch, and Confederation of All India Traders (CAIT) are not in favour of the Walmart-Flipkart deal as this could affect sellers’ business.

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Reiterating other trader bodies sentiments, AIOVA too called out government on FDI rules, as in its media statement it said that, “sadly, Government of India as a whole has not opened any investigations in the open and blatant violation of FDI Policy of the country by certain pseudo marketplaces,” it said, claiming that this amounted to injustice for thousands of e-sellers that it represents.

DIPP rules

Indian government’s Department of Industrial Policy and Promotion (DIPP) had started a consultation process in January 2014, which revealed that industry bodies & MNCs favoured FDI In e-Commerce but traders body opposed it. As an outcome of the same, in March 2016, the government disallowed FDI in B2C e-commerce in India while FDI in marketplaces was allowed to continue.

Rule breaking? Note that E-commerce giant Amazon got a nod from DIPP last year to stock and sell local grocery produce online. It’s worth noting that in its filing with the DIPP on FDI in B2C commerce (which eventually wasn’t allowed), Amazon had said that B2C E-commerce “could” be restricted to non-perishable products. Groceries are perishable products, and Amazon currently sells both perishable and non-perishable items.
Besides FDI, here’s is how FDI defines e-commerce as, and the conditions it defined in 2016.
E-commerce – E-commerce means the buying and selling of goods and services including digital products over a digital and electronic network.
Marketplace based model of e-commerce – Providing of an information technology platform by an e-commerce entity on a digital ad electronic entity which can act as a facilitator between buyer and seller.
Inventory based model of e-commerce – An e-commerce activity where the inventory of goods and services is owned by e-commerce entity and sold directly to consumers. FDI is not permitted in the inventory based model of e-commerce.
– Marketplace e-commerce entity will be permitted into transactions with sellers registered on its platform on a B2B basis. However, FDI in B2C e-commerce is permitted in the following circumstances:
      i) A manufacturer is permitted to sell its products manufactured in India through e-commerce retail. ii) A single brand retail entity is operating through brick and mortar stores is permitted to undertake retail trade through e-commerce
iii) An Indian manufacturer would be the investee company where it is the owner of the Indian brand. The rules also add that the manufacturer must create 70% of the goods in-house and 30% may be sourced from Indian manufacturers.
– An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies.
-E-commerce entity may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services.
– In marketplace model, any guarantee and warranty of the goods sold will be the responsibility of the seller.
– E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and will maintain a level playing field.
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Offline players previous efforts

There is an ongoing battle between e-tailers and retailers. Offline retail players and bodies have continuously notified about the malpractices or unfair practices like FDI violations, heavy discounts, not maintaining level playing field etc of e-commerce players.

In 2016, AIOVA had pointed out a technical glitch in Flipkart’s system is returning incorrect weight value, leading to weights being incorrectly recorded and charged to sellers (in form of shipping charges) at random instances. AIOVA had said in a trade advisory notice that improper weight values lead to incorrect shipping and reverse shipping charge being billed to sellers.

In April, Retailers Association of India (RAI) sent a letter to Ministry of Commerce & Industry seeking action against e-commerce players Flipkart and Amazon for apparently violating Foreign Direct Investment (FDI) rules in India by “influencing prices and illegally funding abnormal discounts” on their platforms. RAI’s members include retailers such as Aditya Birla Retail Ltd, Future Group, Reliance Retail, Fab India, mobile handset manufacturers, apparel vendors etc.  Last year also, in October, RAI had sought help from the Prime Minister’s Office (PMO) on the unfair practices of e-commerce players in India and complained that the e-tailers are not adhering to the government guidelines. The government set up rules for e-commerce players, under which e-tailers must not have more than 25% of their overall sales from one vendor, and RAI had said that the e-tailers haven’t practised it and rather established new sellers to comply with the rules.

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