Assocham against over-regulating e-commerce after Flipkart fiasco

The Associated Chambers of Commerce and Industry of India (Assocham) on Sunday said the Flipkart incident, which led to the company apologising to millions of its customers, should not be used as an excuse by the government to over-regulate the e-commerce sector.

"The Flipkart incident resulting in inconvenience to enthusiastic customers on the Diwali offer should be taken at the most as one-off case and let it not be used as a ploy or an ammunition to subject the fledgling and hugely promising e-commerce space to regulation over and above the rules of the game which are applicable to normal business," Assocham said in a statement in the national capital.

Assocham said the matter should rest, after the promoters of the company had expressed regrets. "If at all any regulatory issue is involved, let it be dealt within the existing laws concerning interests of the consumers," the industry body added.

"We failed to live up to this promise yesterday (Oct 6) and would like to apologise to every single customer for our failure," the home-grown e-commerce major said in a mail to all its registered users after its portal crashed for hours during the day-long sales and rejections owing to stocks running out in minutes Monday.

Assocham added that subjecting the sector which holds big promise in terms of creating new market among the aspirational middle class consumers will "kill the business in its infancy, denting the entrepreneurial spirit of the promoters".

Claiming that a record 1.5 million people shopped on its portal, the Bangalore-based e-tailer accepted it was not adequately prepared for the sheer scale of the event.

"We didn't source enough products and deals in advance to cater to your requirements. More over, the load on our server led to intermittent outages, further impacting your shopping experience on our site," Flipkart co-founders Sachin Bansal and Binny Bansal said.

Given the kind of enthusiasm of both e-commerce players and the consumers in the country, the sector holds a great promise of $15-18 billion in the next three years, the chamber said.

Flipkart's sale, that offered steep discounts on a range of products, has, however, also raised concerns among traders that such campaigns would badly affect players in the traditional retail market.

The government has said it will look into complaints and take a call on whether more clarity is required on e-commerce in retail.

"We have received many inputs. (A) Lot of concern has been expressed. We will look into it," Commerce and Industry Minister Nirmala Sitharaman told reporters in the national capital on Flipkart's 'Big Billion Day' sale.

Government policy currently allows 100 per cent foreign equity in business-to-business e-commerce, but not in retail trading.