E-Commerce giants face heat due to new FDI regulations |
The government`s new Foreign Direct Investment norms for e-commerce came into effect from morning of February 1. This dealt a blow to the hopes of e-commerce giants Amazon and Flipkart to get these regulations postponed or scrapped. The department of industrial policy and promotion stated that they considered the requests sent to them by e-commerce companies and only after that the competent authority has given a go ahead to implement the new norms. The new regulations barres exclusive tie-ups between e-commerce firms and vendors and leaves no option for them but to follow the marketplace model. Under the marketplace model, the firms cannot influence the vendors to set prices of goods & services and have to offer same terms to all vendors. These regulations is having a will have major impact on big e-commerce firms but small firms will not be affected. There are also speculations that this may result into job losses for employees working in the e-commerce industries. The impact is already been felt by the consumers as the prompt delivery mechanisms of these e-commerce firms are hit with issues like week long delay in delivery, non-availability of some premium products and lack of stock for number of items, have crept up.
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