This government seems to be delusional. They boast of inreased FDI in budget speech, but have been damaging the foreign investment already made. The e-commerce rules will definitely be a big warning for other foreign investors. Flipkart and Walmart invested USD 20B in last 2 years, this is significant considering total FDI in last 5 years being USD 240B.
Now, for the people saying the move is to protect small traders/retailers, why is the same regulation not applied to indian e-commerce marketplaces such as Snapdeal? If the objective is to restrict online players capturing market by giving unreasonable discounts, then even Indian companies should have same restrictions.
That justification by government is just a farce, the only reason is to create a penetrable market for impending launch of Jio's marketplace. With Amazon and Flipkart having almost 65% or market, it would have been tough for Jio. But now it will be much easier. And yes, Jio will offer similar discounts when they launched.
They did the same with 4G. One big reason Jio is able to provide data for so cheap is that the license cost of 4G proved to be much cheaper then existing 2G/3G licenses which older players are paying.