Indian Finance Ministry Stalls With New E-Commerce Regulations Over Unnecessary Harshness

There is disagreement amongst the government bigwigs over-tightening the noose around e-commerce rules for companies operating in the country. According to the finance ministry, some of the rules are ‘excessive,’ and seemingly unnecessary.

The new rules will impact the business of companies like Flipkart, Walmart, Reliance Industries, and Tata Group. As buying sensibilities of the middle-class Indian is growing, the market is pitched at $188billion by 2025, according to a study report by the Grand Thornton.

Strangely, the objects are a dozen in total. The first rule change memo was floating in June and has (to date) not been finalized. According to a source reported by a leading national daily, “The ministry of finance raising such concerns would likely spur a rethink of the policy.” The whole drama was put to an end, once the flash sale gimmick was halted amongst the e-commerce giants that would hold onto stocks, push private labels, and probably take a commission from vendors to sell their brands on the top of the shelf.

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Though the rules were announced after complaints from brick-and-mortar retailers about alleged unfair practices of foreign companies, they also drew protest from Tata Group, with more than $100 billion in revenue, which is planning an e-commerce expansion.

The Finance Ministry, NITI Aayog, and the Ministry of Corporate Affairs have all felt that the law change proposals seem to have gone beyond the stated aim of protecting the consumer. In fact, it seems to be hampering the growth of a potential sector which creates a massive number of jobs today. NITI Aayog’s vice chairman, Rajiv Kumar, has already written to Piyush Goyal, who holds the responsibility of both ministers for commerce and consumer affairs, saying the rules could hit small businesses. There is also so called ‘unpredictability in the policy making’. This is because it has set precedence over the way the consumer affairs ministry has changed e-commerce policies too often in recent years and taken a hardline regulatory approach that especially hurts American players.