Government to change strategy for keeping an eye on huge discounts offer by e-commerce firms like Amazon, Flipkart

The Centre is planning to revive its strategy to keep an eye on massive discounts offer by major e-commerce players like Amazon, Flipkart among others.

Citing sources, a report in the Times of India stated that the commerce and industry ministry is looking at ways to strengthen the e-commerce sector while safeguarding the interests of domestic retailers.

Lobby groups such as CAIT and Swadeshi Jagran Manch, an RSS affiliate, have taken up cudgels on behalf of local kirana and small shop owners, the publication stated.

A draft — which was junked for all practical purposes within days of it being shared with stakeholders last July — had proposed a sunset clause defining the maximum duration for differential pricing strategies such as “deep discounts”. It had also proposed preferential treatment for homegrown e-commerce players while allowing foreign direct investment in some segments. Although FDI has been ruled out, the issue around regulating e-commerce is back on the table, senior officials said, adding that details were yet to be thrashed out. “Globally, we have seen the disappearance of retail stores, be it book shops or smaller shops. Even large format sector has come under pressure,” a source told the newspaper.

The report said that many in the government think that e-commerce giants, like Amazon and Alibaba, have deep pockets and are willing to lose money for years till competition from smaller players is nearly wiped out.

Earlier, the Competition Commission of India had said that the big billion discounts offered by the e-commerce majors are not a competition issue.

Speaking to DNA, commission chairman Sudhir Mital explained that there is no need for them to step in and intervene because, "CCI steps in if it is found that the dominant player is indulging in predatory pricing to exclude others."

Global auditing firms also support the CCI's stand on why the current windfall discounts do not fit in the category of predatory pricing behaviour. "Fundamentally, it is the market forces that determine the pricing. CCI can intervene only when a dominant player, who is able to unfairly influence the market, resorts to predatory pricing or creating constraints on supply side or by forming cartel," said RSM India founder Suresh Surana.

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