A day before India’s new e-commerce policy starts, Amazon & Flipkart aren’t feeling assured

New Delhi, Jan 31: With a day to go for India's new e-commerce policy to become operational, online retail giants like Amazon and Flipkart are hoping that there will be an extension in the deadline since they are just not ready yet for the change.

In a report, Quartz cited Amazon India saying in a statement that with over 4 lakh sellers and hundreds of thousands of transactions occurring daily on the Amazon India Marketplace, it needs more time to understand the policy in depth.

Similarly, Walmart, which owns Flipkart, has spoken in favour of extending the deadline from February 1.

On December 26, the central government run by the BJP came up with a sudden announcement about several restrictive changes to its FDI (foreign direct investment) policy for the e-commerce sector.

"The asks were big: Online marketplaces cannot enter into exclusive deals for selling products on their platforms and not more than a quarter of the inventory on an e-commerce platform can come from a single vendor. The government has also restricted marketplaces from influencing prices in a bid to curb deep discounting," the Quartz report said.

Amazon, Flipkart earnings could take a hit, feel experts

According to analysts, the new policy could have a serious dent on the earnings of the online retailers. As per CRISIL Ratings, the two retailers could lose up to 40 per cent of their revenues by next year because of tight FDI rules (that is equivalent to between Rs 35k crore to Rs 40k crore).

Experts have backed the requests made by Amazon and Flipkart, said the Quartz report.

It quoted Atul Pandey, partner at law firm Khaitan & Co. from Mumbai as saying: "The policy envisages substantial internal restructuring insofar as the major e-commerce entities are concerned, so as to ensure that the sellers are disconnected from the e-commerce entity or its group company, (which) clearly indicates that they're expected to spend substantial time in restructuring their operations."