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Amazon, Flipkart Likely To Get Hit After India Tightens Its E-Commerce Rules

Amazon India said it is currently evaluating the new rules, while Flipkart did not immediately respond to a request for comment.

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Security guards stand at the reception desk of the Amazon India office in Bengaluru, India, Aug. 14, 2015. VOA

India will ban e-commerce companies such as Amazon.com and Walmart-owned Flipkart Group from selling products from companies in which they have an equity interest.

In a statement, the government also said that the companies will be prevented from entering into exclusive agreements with sellers. The new rules will be applicable from February 1.

“An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” the commerce ministry said in a statement.

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The logo of Amazon, online retailer is seen at the company logistics center in Lauwin-Planque, France. VOA

E-commerce companies can make bulk purchases through their wholesale units or other group companies that in turn sell the products to select sellers, such as their affiliates or other companies with which they have agreements.

Those sellers can then sell the products to other companies or direct to consumers, often at attractively low prices.

The new regulations follow complaints from Indian retailers and traders, who say the giant e-commerce companies are using their control over inventory from their affiliates, and through exclusive sales agreements, to create an unfair marketplace that allows them to sell some products at very low prices.

The All India Online Vendors Association (AIOVA) in October filed a petition with the anti-trust body Competition Commission of India (CCI) alleging that Amazon favors merchants that it partly owns, such as Cloudtail and Appario. The lobby group filed a similar petition against Flipkart in May, alleging violation of competition rules through preferential treatment for select sellers.

Flipkart, e-commerce
Flipkart did not immediately respond to a request for comment.

Wednesday’s notification also said that the cash back that customers get as an incentive while online shopping should not be based on whether the product was purchased from an affiliate of the platform or not.

The new rules said that services provided to vendors on an e-commerce platform and by that entity’s affiliates should be done so at arm’s length and in a fair and non-discriminatory manner.

Backdoor market entry

New rules will appease small traders and farmers who fear that U.S. companies are making a backdoor entry into India’s retail market and could squeeze out small corner shops that dominate Indian retailing.

The Confederation of All India Traders in a statement said that if the order is implemented in full then malpractices, predatory pricing policies and deep discounting by e-commerce players will no longer occur.

 

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It’s important to know how the system as a whole works. Flickr

 

CAIT secretary general Praveen Khandelwal said the new rules will put an embargo on the tactics adopted by the global players to control and dominate retail trade in India through e-commerce.

In May, CAIT had raised objections to Walmart’s $16 billion acquisition of Flipkart saying the deal would create unfair competition and result in predatory pricing.

Also Read: Online Retail Giant Amazon Announces Record Sales For Holiday Season in 2018

The new regulations build on existing rules under which foreign investors can acquire 100 percent of e-commerce companies, with the exception of a model based on inventory from which they are barred.

Amazon India said it is currently evaluating the new rules, while Flipkart did not immediately respond to a request for comment. (VOA)

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India can Lead in Setting Standards for Ethical use of AI: Microsoft Executive

Microsoft on Friday announced a partnership with the Indian School of Business (ISB) to equip business leaders with tools and strategies to make their organisations AI-driven

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FILE - A sign for Microsoft is seen on a building in Cambridge, Massachusetts, March 18, 2017. VOA

By Gokul Bhagabati

With the government focusing on the use of Artificial Intelligence (AI) and Machine Learning (ML) as people are increasingly adopting digital technologies, India can lead in setting standards for ethical use of AI, a top Microsoft executive said on Friday.

“The real application of AI needs to be to empower human ingenuity and to accelerate innovation for all kinds of work and thinking,” Anant Maheshwari, President, Microsoft India, told IANS.

In an earlier interview with IANS on the eve of 73rd Independence Day, Prime Minister Narendra Modi said that the government is trying to leverage technology like AI and ML to improve school education.

Finance Minister Nirmala Sitharaman in her maiden Budget speech in July announced that the government will lay focus on new-age skills like AI, Internet of Things, Big Data, 3D Printing, Virtual Reality and Robotics.

“About 91 per cent of organisations today plan to leverage AI within the next three years to drive their businesses and the biggest issue they point out for not using it right now is lack of skills,” Maheshwari said.

Artificial Intelligence Bot
Artificial Intelligence Bot. Pixabay

“India is among the top three geographies globally in terms of the supply of skills for AI and that bodes very well for India to lead and contribute significantly in the world of AI,” Maheshwari added.

“We can very much create use cases and the standards for ethical use of AI. I am quite optimistic on the role India will play in the emergence of AI and the principles of AI,” he noted.

Also Read: Smartphones Do Not Damage Mental Health Of Adolescents

Microsoft on Friday announced a partnership with the Indian School of Business (ISB) to equip business leaders with tools and strategies to make their organisations AI-driven.

“The initiative we are launching today between ISB and Microsoft really addresses not only the issue of creating right awareness around the skill set needed to drive the AI strategies, but also provide the tool sets to create the AI strategies, to create the discussion around what culture is needed inside an organisation to drive AI and also have the awareness of the ethics and principles around it,” Maheshwari emphasised. (IANS)