India’s e-commerce policy calls for equal treatment with sellers

India will require e-commerce firms to treat sellers equally on their platforms and ensure transparency, according to a draft policy seen by Reuters on Saturday that follows criticism against business practices of big online companies.

India has been deliberating a new e-commerce policy for months amid complaints from brick-and-mortar retailers who allege online giants like Amazon and Walmart’s Flipkart flout federal regulations. The companies have denied the allegations.

A Reuters special report last month revealed that Amazon has for years given preferential treatment to a small group of sellers on its India platform and used them to circumvent the country’s foreign investment rules.

The latest draft of the policy document says operators should be impartial in their dealings with sellers.

“E-commerce operators must ensure equal treatment of all sellers/vendors registered on their platforms and not adopt algorithms which result in prioritising select vendors/sellers,” it says.

A spokesman for the commerce ministry declined to comment. The policy will apply to Amazon and Flipkart - two top e-commerce players in India - as well as domestic players like Reliance Industries, which has plans to expand its JioMart online platform.

All three firms did not immediately respond to a request for comment.

Separately, India is also considering changes to foreign investment rules that could prompt players including Amazon to restructure their ties with some major sellers, Reuters reported in January.

Government officials are set to hold talks next week with industry executives on such rules, according to people with direct knowledge.

On Saturday, top government officials from various departments, including the commerce ministry, met to discuss the e-commerce policy. The timeline of publication and whether it will be subject to further changes were not immediately clear.

Indian traders have also complained about steep discounts offered by online companies which smaller retailers have not been able to match. Amazon and Flipkart have said they comply with all laws.

E-commerce firms must “bring out clear and transparent policies” on online discounts, the draft document says.

The Reuters special report last month - based on internal Amazon documents dated between 2012 and 2019 - showed the company helped a small number of sellers prosper on its India platform, giving them discounted fees and helping one cut special deals with big tech manufacturers.

Amazon has said it “does not give preferential treatment to any seller on its marketplace,” and that it “treats all sellers in a fair, transparent, and non-discriminatory manner.”

Meanwhile With growing food and fuel prices, India’s retail inflation increased in February as the Consumer Price Index rose to 5.03 per cent against 4.06 per cent in January.

The consumer food price index was at 3.87 per cent in February, in a steep rise from 1.96 per cent a month ago, showed data from the Ministry of Statistics & Programme Implementation.

The latest data gains significance as the February CPI is the last CPI inflation print before the RBI’s monetary policy review.

The combined inflation rate for food and beverages was at 4.25 per cent and that of pan, tobacco and intoxicants was at 10.70 per cent in February 2021.

As per the official data, the inflation rate for fuel and light was at 3.53 per cent.

Retail prices of petrol and diesel have hit record highs across the country in the past couple of months in line with the rise in global crude oil prices, affecting the common man.

Pump prices of the transport fuels have been unchanged for around 13 days now at record high levels ahead of the upcoming Assembly polls.

Radhika Rao, Economist at DBS BANK, Singapore said,”Improving growth expectations and firm crude prices are complicating monetary policy expectations.

The one-year implied rate has risen this year, as have 5-year overnight index swaps, as markets build policy tightening risks. Bounce in February’s inflation adds to this debate. Much of the increase stemmed from a sequential uptick in staple vegetables and commodity price pressures. With part of the pass-through also seeping into services (transport), core inflation hardened to 5.9 per cent y/y, spurred also by a return in the demand impulse and return in producers’ pricing power.”

Kunal Kundu, India economist, Societe Generale, Bengaluru, said, “while the low statistical base effect is partly responsible for this uptick, there are telltale signs of price pressures building up, notably through petro (petroleum) product prices bus and airfare segment. Price pressure is also building up from manufactured product price (driven by a sharp rise in commodity prices) and house price channel.”