The Indian government may introduce regulations that could prevent ecommerce and food delivery companies from selling products and services of related parties or associated enterprises to registered merchants on their platforms. This means that companies such as Flipkart and Amazon India may no longer be able to offer ancillary services like in-house logistics or payment products to their registered merchants. Sources have also indicated that food delivery companies like Swiggy and Zomato could be included in the purview of these proposed regulations.
The regulations, if passed, will also prohibit the licensing of in-house brands to third-party sellers for online sales. These regulations are being discussed by the Consumer Affairs Ministry and have also involved the Department for Promotion of Industry and Internal Trade and the Ministry of Electronics and Information Technology.
It is worth noting that similar regulations were proposed in 2021, which were protested by e-retailers. The ecommerce companies had argued that such rules would affect their operations and brands materially. However, it is not yet clear how the current regulations may differ from those proposed in 2021.
At the time of reporting, Swiggy, Amazon, and Flipkart have not commented on the matter, and it is not possible to independently verify this development.
If implemented, these regulations could have a significant impact on the ecommerce industry in India, especially on the business models of companies like Amazon and Flipkart, which have invested heavily in building out their logistics infrastructure and payment systems. The move could also affect in-house brands that are sold by these platforms to third-party sellers.
