The government on Sunday said e-commerce platforms will not be allowed to sell non-essential items during the lockdown extension, a move that the industry described as complete U-turn from what was said earlier this week.
This however, marked a big win for small trader bodies, most notably the Confederation of All India Traders, which has been requesting the government to reconsider its decision of allowing non-essential items’ sale through e-commerce platforms.
In a letter to the prime minister, CAIT National Secretary General Praveen Khandelwal said allowing e-commerce firms to sell non-essentials at a time when small brick and mortar traders are only allowed to sell essential items, would be “unfair” and “create further imbalance in the level playing filed”.
It was the “direct intervention of the Prime Minister’s Office” that saved the day for small traders, Khandelwal told Business Standard. “We wrote a communication to the PM and apprised him of the situation. The whole of yesterday (Saturday) went into speaking to ministers or officials…The Commerce Ministry was also very supportive,” he said.
On Sunday, in a notification, the Ministry of Home Affairs excluded vehicles used by e-commerce companies from carrying all kinds of items. The Ministry of Information and Broadcasting said in a separate press release, “It has been clarified by Ministry of Home Affairs that supply of non-essential goods by e-commerce companies will remain prohibited during lockdown.“
Flip Flops by the government
E-commerce companies such as Amazon, Flipkart and Snapdeal were making preparations to sell electronics such as phones, laptops, and air coolers, which would have been allowed to be sold on the online platforms, starting April 20, after getting a go-ahead from the government on April 16.
The norms earlier allowed them to operate without any restriction on their working hours from April 20, provided they ensured strict social distancing.
“This is quite shocking. It’s like you are playing gully-cricket, then you are told to play in the stadium and you make all the preparations, invest time and money and now suddenly you are being told to go back and play gully cricket,” a senior official working with an e-commerce company said. “Apart from having concerns about Coronavirus and increasing efforts to fight it, e-commerce companies believe that the government has taken this decision after coming under significant pressure from the physical retailers who did not want the online retailers to sell the non-essentials,” said the person.
The Home Ministry’s joint secretary Punya Salila Srivastava said in the daily briefing on Covid-19 that the decision to allow e-commerce companies to deliver non-essentials was reviewed because the ministry felt that allowing too many things would impact the lockdown.
While appreciating the government’s concern for well being of citizens, Srinivas Mothey, Senior Vice President, Paytm Mall said the ambit of essential goods should be increased. “India is mostly working from home at the moment but many are finding it difficult as they are running low on certain items necessary to effectively operate under lockdown…If the lockdown continues, lack of proper technical support would hinder the efficiency of employees which in turn would affect a company’s operations,” he added.
Kazim Rizvi, Public Policy Researcher and Founder, The Dialogue, a public policy think tank, said Sunday’s order was “an unfortunate step that will not ease the burden on the economy or the people of India. It is unclear whether this decision was taken to provide level playing or in the interest of ensuring safety of Indians. An inconsistent approach to decision making will hurt the interests of the communities and the sellers at large, who will form the nucleus to revival of economy and will also not help in the fight against COVID 19”.
The e-tailers were already facing an uphill task in making non-essential items available to its customers, with absenteeism of its delivery staff, delays in getting various permissions from local authorities and with the Confederation of All India Traders (CAIT) raising its voice against the “leeway” given to the online platforms.
CAIT President BC Bhartia and Khandelwal have been vocal about opposing e-commerce platforms and their practices since a long time. During a series of video conferences being held by CAIT on daily basis with trade leaders of different States, the organisation said about 70 prominent trade leaders across the country in the video conference on Saturday had unanimously expressed that traders of India felt hoodwinked by such a decision and the pain and misery which had already existed due to Covid-19.
“The new guideline will disappoint not only the consumers whose list of essentials had expanded to work from home and study from home products but also the thousands of small businesses, sellers and manufacturers across the country, who had geared up in the last 48 hours to provide millions of people with safe access to products. On behalf of consumers and sellers, we hope that this situation is rectified soon so that the urgent need of consumers is met and that there is a revival of economic activity,” said Amazon in a statement.
Amazon said it will continue to follow the guidance and deliver essential products and work closely with all central, state and local authorities for expedited processes to make safe deliveries of priority products possible.
E-commerce sellers left high and dry
As part of the steps to support the sellers on its platform, Flipkart had announced special offers on loans for its sellers under the company’s Growth Capital programme. The online retailers had reached out to lakhs of sellers to keep the stock ready and analysts say the decision is going to have a huge negative impact on their working capital.
“It is not a switch on and switch off procedure but a very complex process and a lot of capital and time go into it. The sellers already had very less working capital due to the Covid-19 crisis and had taken loans and invested whatever little they had to keep the stock ready, but now they would suffer even more,” said a person aware of the efforts being made by e-commerce firms. “Take the example of sellers who trade water coolers, their selling period is just 3-4 months and they have put their entire capital into it.”
The e-commerce firms are asking the government to expand the scope of essential items such as phones, laptops and education accessories at a time when most of the professionals are working from home as well as the students who are adopting online learning.
“When every startup with few a delivery boys, is entering into online grocery what is the logic of stopping delivery of non-essentials? If the logic is to stop too many delivery boys on the ground, please stop the new entrants in the online grocery space and put a limit,” tweeted Satish Meena, a senior forecast analyst at Forrester Research.