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India's eCommerce players gear up to face anti-China sentiment

Amazon Flipkart to display country of origin
(Image credit: Future)

Amazon and Flipkart are among the major eCommerce players in India who would be displaying the "country of origin" of products sold by them. The move follows a discussion between federal government officials and representatives of the e-retailers earlier today in the wake of the growing boycott China sentiments. 

Sources in administration told us that the government told the eCommerce companies about how it had made it mandatory to mention the "country of origin" for sellers registered with the Government e-Marketplace, used by the federal government to procure goods and services. "We sought the cooperation of the eCommerce players to replicate this and even mention the percentage of Indian components in these products," the source said on condition of anonymity.

What's behind the move?

Though the change in rules have ostensibly been developed to promote the "Make in India" initiative as well as the "AtmaNirbhar Bharat" (self-reliant India) campaign, their timing leaves nobody in doubt that access to Chinese products, especially smartphones and other electronic items, could become tougher in the days ahead. 

An official of a top eCommerce company said that there was no coercion from the government and that the group had themselves decided to go ahead with the process of displaying the "country of origin" against these products. The representatives apparently decided to get this rolling within the next couple of weeks. 

Order volumes are growing

Earlier this week, Unicommerce, a technology solutions provider for eCommerce companies, had revealed that India had recovered close to 90% of the overall order volumes that it had lost to the two-month lockdown due to the Covid-19 pandemic. Sale of non-essentials were allowed only in the early part of May. 

However, the report said that the total volumes of goods sold online remained low, suggesting that consumers were avoiding big-ticket purchases, especially of smartphones. Having said so, the OnePlus 8 base model sold out within minutes of its launch on Amazon's India portal. Other items that saw customer interest included trimmers, Wi-Fi routers, and computer accessories. 

(Buy the OnePlus 8 on Amazon India)

It's not just about smartphones

Apart from smartphones, which is the biggest driver of online sales in India, personal care products, home furnishings, toys and consumer electronics are also major contributors to revenues for the eCommerce industry. And, most of these segments rely on supply chains from China and could be impacted in the days ahead. 

Meanwhile, most eCommerce companies pointed to a spike in demand from tier-2 and tier-3 cities and towns, possibly due to the fact that during the lockdown, delivery to these locations were lower in priority for the companies. A report in the Economic Times quoted officials at Myntra, a fashion marketplace owned by Flipkart, to say that jeans, streetwear, ethnic wear and casuals were among the most popular segments. And, most of these have a direct link with the Chinese textile industry. 

Several political and trade organizations have welcomed the move by eCommerce players to mention the "country of origin". The Confederation of All India Traders, a nationwide body of traders, welcomed the move on grounds that it would make online transactions more transparent and help India focus on products that require indigenization. 

From the federal government's point of view, it has pulled the plug on a few deals that China had signed with state-owned companies such as BSNL and the Railways. While the telephone service provider has been asked to refrain from using Chinese equipment for upgrading 4G services, a contract worth Rs.470 crore was cancelled citing poor progress in the case of the railways.