Bad e-commerce policy

deccan chronicle  | Deccan Chronicle

Opinion, DC Comment

The changes were wrought on the premise that the small Indian retailer and the pop-and-mom stores would benefit from such curbs on the giants.

What the periodic amending of rules does is to make it uncertain for international businesses to commit to India as a huge marketplace with a billion plus potential customers.

The changes in e-commerce policy and FDI norms brought about by the government since February 1 do not favour the consumer. The policy was changed to try and create a level playing field in which the major e-retail players like Amazon and Flipkart-Walmart will not be able to offer deep discounts and exclusive avenues for products. Ultimately, the consumer will be paying more for all products he buys online while the international giants will tweak their business to be compliant with the changed laws. For instance, they can either drop their stake in the marketing arms that procure goods at wholesale prices or reduce their stake to below 25 per cent. The changes were wrought on the premise that the small Indian retailer and the pop-and-mom stores would benefit from such curbs on the giants.

What the periodic amending of rules does is to make it uncertain for international businesses to commit to India as a huge marketplace with a billion plus potential customers. Tinkering with the e-commerce model, which right now amounts to only about 5.7 per cent of total trade in the country, is only likely to affect the giants who may lose up to 40 per cent revenue in the next couple of years. Given the size of the market and their investments in billions of dollars already, they will stay in the game, retune their marketing and still play a significant commercial role as mobile Internet expands even as online payment modules are proving their efficacy and security. The model has made the customer feel like a king as he orders online the same merchandise from any nook and corner of the country that would otherwise be available only in high street stores. It would be a pity if the deep discounting practices are abandoned by e-retailers just because India likes to eternally tinker with the rules depending on the lobbying power of vested interests.

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