It’s not just offline retailers which will benefit from the new restrictions imposed on e-commerce players, but also wholly-owned Indian online retailers.

That’s because the restrictions on sourcing products and pricing do not apply to companies that have not received foreign investment.

The Centre had announced that 100 per cent FDI will be allowed in online marketplaces.

However, these marketplaces cannot influence pricing of products directly and indirectly, and cannot get more than 25 per cent of sales from one single vendor.

These riders are not applicable to online marketplaces completely-owned by Indian companies.

Reliance Group, Tatas, Aditya Birla Group and Mahindra & Mahindra are planning to enter the e-commerce segment and could have the edge as they can continue with the discounting model. Even new start-ups that do not have foreign investments will not come under the ambit of the new norms.

Atul Chaturvedi, Joint Secretary, DIPP, in reply to a query from BusinessLine , said: “The guidelines issued by DIPP pertain to only those e-commerce companies which have FDI and not all e-commerce companies.”

Companies such as Flipkart and Snapdeal have already received FDI through foreign private equity and venture capitalist investors and, hence, have to immediately comply with the price-influencing norms.

Upper hand In such as scenario, Reliance Retail, for example, which plans to enter the e-commerce segment through a marketplace model, would have the upper hand over Flipkart, Snapdeal or Amazon, when it comes to discounting. This also means they can influence pricing directly and indirectly, gaining an edge over the competition in a market that is largely driven by discounts and cashbacks.

With over 150,000 vendors, the cash-rich Reliance will compete with Flipkart, which has been in the business for over eight years and has about 40,000 sellers on its platform.

Amazon India has more than 50,000 sellers and Snapdeal has around 200,000 vendors. Reliance plans to enter the market with electronics, appliances and apparel, the biggest categories for online players.

Reliance Retail declined to make any comments for this story. Meanwhile, Tata Group has also announced its entry into the e-commerce segment.

So, did the government come out with these regulations to promote the entrepreneurship ecosystem?

Sanjay Mehta, an angel investor, said that while the government might not have played sides, the move would benefit Indian companies.

“Reliance and Tata have enough cash. Getting customers through discounts will not be an issue for them,” Mehta said.

He, however, added that the Indian consumer is already addicted to online retailers and it will be interesting to see if these customers buy on Reliance or Tata’s platforms only for the discounts.

Stiff competition Meanwhile, rating firm Crisil had said in a report that the new norms would also benefit brick and mortar retailers (like Future Group), whose profitability was being hurt because of aggressive discounting by online players.

“Facing what seemed like an existential crisis over the past couple of years, these retailers had gamely fought back by reorienting store profiles, increasing private labels and sharpening focus on tier II and III cities, thereby improving overall operating efficiency,” Crisil said in a report.

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