Government stick to the February 1 deadline for e-tailers

The Department for Promotion of Industry and Internal Trade (DPIIT) said that they will not extend the deadline of February 1 for implementing the revised guidelines for e-commerce companies having foreign direct investment. Though earlier Amazon and Flipkart have asked two different deadline for the extension on the FDI policy, the new rules will come into effect on Friday as per plan.

"After due consideration, it has been decided, with the approval of the competent authority, not to extend the deadline," it said in a statement.

The fact is, Cloudtail and Appario Retail, which sell on Amazon and have equity participation from the US e-commerce major, will not be allowed to sell on the platform. It is a good news for the growth of the brick and mortar shops in the country, but a huge blow for the two e-tailers. If they will not comply with the new law that will come into force from today, it will be treated as its violation.

As per the new rules, entities like Cloudtail and Appario Retail, which sell on Amazon and have equity participation from the US e-commerce major, will not be allowed to sell on the platform. Further, by classifying sellers who drive more than 25% of their revenues through a single platform as controlled entities, the new guidelines also prohibit multitude of sellers who source directly from wholesale arms of Amazon and Flipkart to go off the platforms. While certain experts feels that, these strongly influenced firms might be in violation of the law for some period, others say the penalties could be nominal.

The decision not to extend the deadline has been welcomed by traders’ bodies and home grown platforms such as Snapdeal and ShopClues, which have been campaigning vigorously for this outcome. CAIT sought setting up of a regulatory authority to oversee strict implementation the policy.

This is a welcome move for the small enterprises, moving them a step closer to a level-playing field. “It also sends strong message to violators that legal jugglery, exploiting loopholes and in general disregard for the law will have to stop now, Sanjay Sethi, CEO & co-founder, ShopClues said and experts believes, adherence to rule of law would allow India to create a robust e-commerce sector, which will ensure lasting gains for both buyers and sellers.