The Indian government introduced new rules for India’s e-commerce which will ban foreign online retailers, notably Amazon and Walmart-owned Flipkart, from selling products. Government officials believe that such online platforms should not be sourcing more than 25% of their inventory from a single vendor.

The government stated that the said e-commerce platform companies would be barred from engaging into exclusive dealings with sellers. The reported changes will come to effect starting February 1, 2019.

The move was created after complaints from the country’s traders and retailers who called out the largest e-commerce companies for indulging in predatory pricing destroying businesses owned by small vendors. Through exclusive agreements, the online companies are creating an unjust market that allows them to sell products at rock-bottom prices.

E-commerce platforms companies can purchase in bulk through their wholesale units or partners that sell goods to select sellers, such as their affiliates or companies whom they have secured an agreement with. Such sellers can then market the items to other companies or direct consumers, usually at meager prices.

Last October, the All India Online Vendors Association (AIOVA) had filed a petition to the Competition Commission of India (CCI) alleging the preferential treatment by Amazon to traders that it partly owns, such as Appario and Cloudtail. AIOVA had also filed another petition in May against Flipkart, alleging unfair trade practices through favoring selected vendors.

According to Wednesday’s notification, the cash back that buyers earn as incentives through shopping online shouldn’t be accounted on whether the purchased items were from an associate of the e-commerce platform or not.

India’s new rules on e-commerce state that services for merchants from online selling platforms and their affiliates should be done in a reasonable and fair practice. The said rules will satisfy small vendors and farmers who are worried about American companies dominating the country’s retail market and the possibility of such big stores squeezing out smaller, locally-owned shops.

Once the new regulations are fully implemented, expect that malpractices, greedy pricing tactics and deep-discount bond by e-commerce market players will be suspended, as assured by the Confederations of All India Traders (CAIT).

Praveen Khandelwal, the secretary-general of CAIT, stated that the new rules would put an official ban on global payer’s tactics to dominate and control retail trading in India via e-commerce. CAIT had raised objections in May against Walmart’s $16 billion acquisition of Flipkart stating that the deal would make unfair competition and would result in predatory pricing.