25% cap on sales for marketplace ecommerce player is reasonable

Ruling out any relaxation in the 25 per cent cap on sales from a single seller for e-commerce marketplaces, a top government official today said the limit is reasonable and fair. Permitting 100 per cent FDI in marketplace model of e-commerce, the Department of Industrial Policy and Promotion (DIPP) has put a condition that an e-commerce entity will not be permitted more than 25 per cent of the sales through its marketplace from one vendor or their group companies.

Some e-commerce players, industry experts as well as IT industry body Nasscom have said that restricting sales of a vendor to only 25 per cent of the sales in the marketplace may prove to be restrictive, more so if the vendor sells high value items.

When asked, DIPP Secretary Ramesh Abhishek said: “25 per cent is a fair number because we want it to be a marketplace model and not inventory”.

He said that if a firm is providing a marketplace model platform, sourcing 25 per cent from one vendor is reasonable and large number of sellers can sell through that platform.

Nasscom has said that due to this cap the industry might face difficulties in case of sale of electronic items, where a vendor maybe offering exclusive access to certain items or discounts.

Talking about the rider that e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods and services, he said that such players are not allowed to announce discounts.

Announcing discounts by marketplace model players will infringe the law, he said.

“Discounts can only be given by the owner of the goods or provider of services,” another official said.

Some industry experts have said that the guidelines on pricing may impact big e-retailers.

Source: India Today