Traders’ Lobby Says Big Retailers Like Reliance Can’t Sell Private Labels Online

India’s retail traders’ lobby said not only Flipkart and Amazon but big-box retailers like Reliance Retail Ltd. also won’t be able to sell private labels online after the government barred e-commerce marketplaces from selling products of companies in which they own stake.

“As per new norms, big-box companies like Reliance (Retail) can’t sell their products on their own platforms. They will not be able to give discounts and will not be able to adopt predatory pricing,” Praveen Khandelwal, president at Confederation of All India Traders Association, told BloombergQuint in an interview on Thursday. “They will not be able to have exclusivity.”

Reliance Retail has yet to respond to BloombergQuint’s emailed queries.

India amended its foreign direct policy to restrict online marketplaces from influencing prices. Besides barring online sales of private labels, the new rules, which come into effect from Feb. 1, also bar marketplaces from exclusive tie-ups with sellers.

Still, private labels contribute just 6 percent of e-commerce sales, which itself are estimated to be 3 percent of total retail sales in the country. According to a January 2018 report by the India Brand Equity Foundation, private brands contribute between 20 percent and 40 percent of online sales in more developed markets.

Khandelwal said the government’s move to tighten e-commerce norms will result in a fair market, providing a level-playing field for one and all to adopt e-commerce as another business model.

“Both online and offline traders will now be able to sell their goods on e-commerce platforms in a transparent manner,” Khandelwal said. The need of the hour, however, is effective implementation of the new norms, he said.

“An e-commerce policy is expected to be rolled out by the government by next month,” he said. “The policy should have fundamentals for all kinds of retail businesses, whether it is big box, small retail, e-commerce, direct selling. Every vertical should be given ample opportunity to conduct their business activities in a dignified manner in a fair competitive environment.”

He said the government should also form an authority to monitor and regulate the e-commerce business in India. “A regulator with proper enforcement power would ensure that the policy is strictly implemented.”