Government makes U-turn; says no to non-essentials sales by e-commerce companies

The Ministry of Home Affairs (MHA) on Sunday clarified that the supply of non-essential goods through e-commerce companies will remain prohibited under the lockdown restrictions.

The clarification came even as e-commerce companies were gearing up to begin selling products beyond staples, packaged food and hygiene products in non-containment zones from Monday. Following the MHA’s revised guidelines issued last week, States such as Mahrashtra, Rajasthan, Tamil Nadu and Andhra Pradesh had allowed e-commerce companies to deliver all goods.

Commerce Minister Piyush Goyal , in a tweet, said Prime Minister Narendra Modi’s clarification on limiting e-commerce activities to essentials would help maintain a level playing field for small retailers

Social distancing concerns

A government official told BusinessLine that the government did a re-think on e-commerce activities not only because of objections made by brick-and-mortar retailers to being treated ‘unfairly’ but also due to continued spread of Covid-19 in the country and the need to give primacy to social distancing.

“Traders and retailers had asked the government (that they) be allowed to home deliver non-essentials just like e-commerce (firms) would have, per the earlier MHA notification. It was a fair demand but the government realised that home delivery of a large number of goods could compromise heavily on the need for social distancing,” the official explained. “So, for the time being, all retailers, both e-commerce and brick-and-mortar, are being restricted to essential goods.”

Since the MHA has now removed the clause stipulating that the vehicles used by e-commerce operators be allowed to ply with necessary permits, States like Maharashtra and Rajasthan will have to re-visit their orders giving allowances to e-commerce operations beyond essentials, the official said.

“The withdrawal of notification indicates that small traders are a priority for Prime Minister Narendra Modi and any decision if taken against the traders will not last long,” said Praveen Khandelwal of traders’ body CAIT. The traders body had, on Saturday, written to the PM, expressing regret over the government’s decision to allow e-commerce portals to deliver non- essential goods, terming it “unfair, discriminatory, unreasonable”.

Senior industry executives said e-commerce is a safe channel through which products can be delivered to the consumer's doorstep while maintaining social distancing during the lockdown period.

A senior executive with an e-commerce firm said: “Currently, consumers are only buying products that are a necessity for them and not spending on discretionary items. But, in an extended lockdown period, the definition of essential goods means different things for different consumers. For some, products such as mobile phones, chargers and laptops have become a necessity; for others, feeding bottles for infants or replacement of non-functioning home appliances have become essential.”

Industry players also said that the definition of essential goods should be further defined keeping in mind the evolving needs of consumers.

Ankur Pahwa, Partner and National Leader – E-Commerce and Consumer Internet, EY India, said: “The government’s revision to their earlier position on the supply of non-essential goods via e-commerce is likely a cautious measure, but it does have financial and operational consequences for the e-commerce companies, as also vendors and traders, who were putting plans in place to recommence operations, basis the previous issued guidelines.”

Consumer product makers too believe some mechanism for delivery of products should be allowed during the extended lockdown period. Avneet Singh Marwah, Director and CEO of Super Plastronics Pvt Ltd, said: “We support the decision by the government. However, after 30 days of lockdown’, many electronics products have become essential for consumers. They should allow some form of selling of such products. The safest way to allow this is through the e-commerce channel.”

Meanwhile, Senior Congress leader Randeep Singh Surjewala tweeted: “Dear PM, Yesterday, Congress Party pointed out the injustice to nearly 7 Crore shopkeepers & traders who have shut shops & businesses during lockdown as Govt permitted E-Commerce companies to sell products. Thank you for vindicating our demand.”

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