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Indian e-commerce policies weigh on Alibaba

  • Author:Rachel Xiao Shan
  • Source:fibre2fashion.com
  • Release on :2016-05-16

Global e-commerce major Alibaba, which is planning a direct entry in India is believed to be wary of the country's policies and is likely to take some time before it takes a final decision, according to media reports.

  The Department of Industrial Policy & Promotion's (DIPP) latest guideline on e-commerce that restricts discounting by sellers on any online marketplace platform, is said to be making the Chinese company nervous.

  In addition, high level of cash-on-delivery in Indian e-commerce space and return of goods that comes with it are areas of concern for the company.

  While permitting 100 percent foreign direct investment (FDI) in online marketplace, the guidelines said e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level-playing field.

  The implication is that there will be crackdown on companies which offer freebies, discounts or cashback. Another guideline coming in the way is that no e-commerce entity will permit more than 25 per cent of the sales through its marketplace from one vendor or its group company.

  Alibaba, which already has investments in Snapdeal and One97 Communications-owned Paytm, did not want to comment on the challenges or hurdles that it must cross to enter the India market directly.

 

Meanwhile, the buzz about Alibaba's likely entry has galvanized Indian ecommerce-focussed logistics companies such as Delhivery, GoJavas and Ecom Express which are vying for partnership with the Chinese company.