Tata, Adani’s super app plans hit by draft rules for e-tail

Indian conglomerates will find their e-commerce play significantly impacted, especially their development of apps, if the draft consumer rules that prevent “related parties” from selling on their marketplace-based online platforms are enacted.

The proposals throw a spanner in the works of the Tata Group’s super app, an all-in-one mobile application, that is being tested on key stakeholders, including employees.

Adani Enterprises is also gearing up to launch a super app. A super app can bring all products and services of a conglomerate onto a single platform — allowing users to order grocery & medicine delivery, book flights & hotel rooms, and access investment instruments — from one place.

The Companies Act defines a related party as any body corporate which is a holding, subsidiary or associate of such a body and has a common chain of shareholders and directors. Under proposed rules, Tata Group entities such as Titan, Trent, Tata Motors and Taj cannot be a part of its super app. Ditto for Adani Group companies.

Tatas have formally communicated concerns to the consumer ministry, while Reliance has conveyed that it is supportive of the draft rules. Last week, consumer affairs minister Piyush Goyal had criticised the Tatas for objecting to the draft regulations and overlooking national interests involved in protecting brick-and-mortar businesses.

The draft rules also impact relationships between app operators and related parties. Tata Group entities will not be able to sell products such as Tata Salt and Tata Sampann on their own e-commerce sites like Bigbasket. Likewise, Reliance will also not be able to host Hamleys on JioMart.

Legal experts suggested that conglomerates could modify structures by creating two super/normal apps — they could sell their own inventory on one and list third party products on the other.

The draft rules also restrict super/normal apps from having sellers that share brand names. This means Tata and Adani will not be able to launch namesake super apps. Historically, business houses have grown and built a large customer ecosystem by foraying into diverse sectors leveraging on their flagship brand.