Ecommerce, food-delivery firms face new trouble as government eyes related party services ban

In what could lead to fresh concerns for ecommerce and food-delivery firms, the Indian government may issue rules stipulating that 'related party' or associated enterprises' of internet marketplaces should not sell products or services to a registered merchant on their platforms, multiple people briefed on the matter told ET...

Even food-delivery firms, which offer their delivery fleet to restaurant partners, would come under the purview of a proposed clause on related parties or associated enterprises, people aware of the matter said.. Online marketplaces do not sell products to sellers and they no longer own any stake in seller firms, after the government tightened rules in 2019..

For instance, Amazon Solimo cannot be licensed to outside vendors if the ongoing inter-ministerial discussions fructify in new rules.. While the proposed draft regulations were first discussed nearly two years ago in 2021, etailers like Walmart's Flipkart, Amazon and even Tata Group had raised red flags over some of the above-mentioned clauses being discussed that will affect operations of ecommerce firms as well as their brands...

"While the talks have happened, they (government) are treading cautiously this time conversations have taken place with some of the etailers informally," one of the person briefed on the matter said.. Offline traders and store owners have been complaining to the government that etailers use various data points through their own platforms to come up with new products and services putting offline stores at a disadvantage...

However, ecommerce arm of homegrown enterprises like Tatas and others would also be impacted as per the thrust of the current discussions which may result in final rules that no marketplace should directly or indirectly sell private labels or license them to sellers in India...

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