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Thursday, July 29, 2021

‘Bit of arrogance’: Why is timing of Piyush Goyal’s comments on US e-comms key?

Commerce Minister Piyush Goyal has accused foreign firms of arrogance and of flouting Indian laws by indulging in predatory pricing practices. What exactly did he say, and what is the significance of the timing of his comments?

Written by Pranav Mukul , Edited by Explained Desk | New Delhi |
Updated: June 29, 2021 6:50:47 am
Piyush Goyal, new draft regulations for e-commerceCommerce Minister Piyush Goyal, who also holds the charge of Consumer Affairs Minister, accused foreign firms in the sector of arrogance and of flouting Indian laws by indulging in predatory pricing practices. (Bloomberg Photo: Anindito Mukherjee)

Days after the Centre announced new draft regulations for e-commerce that industry insiders believe target foreign-funded online firms, Commerce Minister Piyush Goyal, who also holds the charge of Consumer Affairs Minister, accused foreign firms in the sector of arrogance and of flouting Indian laws by indulging in predatory pricing practices.

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What did Piyush Goyal say?

While speaking at a virtual event organised by the Stanford India Policy and Economics Club, Goyal, according to a Reuters report, said: “A number of these large e-commerce companies have come into India and very blatantly flouted the laws of the land in more ways than one… I’ve had several engagements with these large companies, particularly the American ones, and I can see a little bit of arrogance.” Amazon India and Walmart-owned Flipkart are top two e-commerce companies in India.

What is the significance of the timing of Goyal’s comments?

Last week, the Consumer Affairs Ministry floated a draft of consumer protection rules for e-commerce sector, with a slew of amendments aimed at making regulations for e-commerce more stringent. Additionally, these large foreign firms are also being opposed by local traders and businessmen that have sought government intervention in business practices of theses companies.

Soon after the draft e-commerce rules were floated, the Confederation of All India Traders (CAIT) termed it as a step to “purify” the e-commerce landscape of the country.

In a statement following Goyal’s comments, CAIT said the minister’s “averment leaves no room anymore for any single transgression of Indian law by these two modern-day avatars of East India Company and a clear cut lesson to other big-wigs of e-commerce companies those having a dream of controlling and dominating not only the e-commerce but even the retail trade of India”.

What do the new e-commerce rules propose and how has the industry reacted to it?

Among various measures proposed, the government has said that online marketplaces will now have to take fall-back liability in case of goods not being delivered properly to the customer. This takes away the liability of delivering goods away from the sellers that list their products on an e-commerce platform. On the other hand, the government is tightening the screws to prevent the marketplace having control over the inventory.

In addition, there are added compliances being proposed on online marketplaces, including providing information to authorities within 72 hours of this data being sought.

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