RAI Wants Ecomm in Pvt Brands

The Economic Times - - Econ­omy -

Over the past year, RAI had sought to draw the gov­ern­ment’s at­ten­tion to the lack of clar­ity on the mar­ket­place model used by ecom­merce com­pa­nies, say­ing this was a dis­guise for multi-brand, busi­ness-to-con­sumer (B2C) re­tail, which com­pa­nies with over­seas hold­ings are barred from un­der the coun­try’s for­eign di­rect in­vest­ment (FDI) pol­icy. Ecom­merce com­pa­nies say they are plat­forms that con­nect buy­ers with sell­ers. RAI had pe­ti­tioned the gov­ern­ment to give clear pol­icy di­rec­tions on FDI in ecom­merce with the aim of safe­guard­ing the in­ter­ests of re­tail­ers and brands. The group­ing had ap­proached the Delhi High Court last year af­ter fail­ing to get a re­sponse from the gov­ern­ment in its quest for par­ity in FDI norms with ecom­merce play­ers, which have at­tracted bil­lions of dol­lars in over­seas fund­ing us­ing the mar­ket­place model.

The as­so­ci­a­tion will ar­gue in its let­ter that since in­ven­tory-based ecom­merce is ex­plic­itly pro­hib­ited un­der the rules, those sell­ing gro­ceries and pri­vate brands op­er­at­ing on that model should be asked to im­me­di­ately cease op­er­a­tions. “While the no­ti­fi­ca­tion said mar­ket­place can­not in­flu­ence sale price, most on­line re­tail­ers have pri­vate brands and can con­trol their pric­ing or give huge dis­counts. This should not be al­lowed,” said one of those cited above.

The rules also stip­u­late that an ecom­merce mar­ket­place can’t have one ven­dor or group unit ac­count­ing for more than 25% of to­tal sales on the plat­form. This could have an im­pact on Ama­zon In­dia as its mar­ket­place is dom­i­nated by Cloud­tail, part-owned by the com­pany.

RAI’s let­ter will also raise the mat­ter of ad­ver­tis­ing cam­paigns by on­line play­ers of­fer­ing guar­an­tees. “The prom­ises they of­fer to­day are un­ten­able (un­der) the new pol­icy,” said an ex­ec­u­tive. Mar­ket­places have to men­tion names, ad­dresses and con­tact de­tails of sell­ers in all com­mu­ni­ca­tions, mak­ing for trans­parency.

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