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Ecommerce companies Flipkart and Snapdeal say FDI norms will have long-term implications for the sector

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Ecommerce companies such as Flipkart and Snapdeal on Thursday said the government's move to tighten norms for online marketplaces will have long-term implications for the sector. "The ecommerce ecosystem created innovations in MSME manufacturing, supply chain, warehousing, packaging and digital payments and has created thousands of jobs already. This is just a start, the industry is set to be a major growth driver for the Indian economy and create millions of jobs in the future," Flipkart said.

Ecommerce companies Flipkart and Snapdeal say FDI norms will have long-term implications for the sector
Ecommerce companies such as Flipkart and Snapdeal on Thursday said the government's move to tighten norms for online marketplaces will have long-term implications for the sector.
"The government policy changes will have long-term implications for the evolution of the promising sector and whole ecosystem," said Flipkart while responding to the the norms.
It is important that a broad market-driven framework through right consultative process be put in place in order to drive the industry forward, the company said.
"The ecommerce ecosystem created innovations in MSME manufacturing, supply chain, warehousing, packaging and digital payments and has created thousands of jobs already. This is just a start, the industry is set to be a major growth driver for the Indian economy and create millions of jobs in the future," Flipkart said.
In the span of a decade, the ecommerce industry has revolutionised the way consumers connect with sellers and local manufacturers, providing tremendous value to both and to the country, it added.
The government on Wednesday took a host of steps and barred e-commerce firms such as Flipkart and Amazon from selling products of the companies in which they have equity stakes or management control.
The commerce and industry ministry also prohibited e-commerce companies from entering into an agreement for exclusive sale of products.
"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 ministry said.
Meanwhile, another online marketplace Snapdeal welcomed the decision and said these changes will enable a level playing field for all sellers, helping them leverage the reach of ecommerce.
"There were a lot of grey areas in the earlier FDI guidelines for ecommerce companies and  yesterday's (Wednesday) enhanced guidelines were meant to close out any such potential grey areas that were creating circumvention of the policy," said Kunal Bahl, co-founder and CEO, Snapdeal.
At the end of the day the purpose of ecommerce marketplaces is to create a platform that can connect the long tail of demand, the long tail of supply in the country and provide MSMEs the ability to reach consumers nationwide which obviously was getting hampered because certain related party sellers were crowding out the small seller, Bahl said.
"The challenge that our space has been facing is that particular sellers were getting disproportionate amount of discounting funded by the marketplaces which was creating a negative impact both for the sellers on the marketplace as well as offline retailers," he added.
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