No more discounts on Zomato and Swiggy? Code of conduct to soon hit online food aggregators

Foodies in India may soon receive bad news when food delivery companies like Zomato and Swiggy may cancel their discount policies to level the playing fields in the industry.

The National Restaurant Association of India (NRAI) feels that Zomato and Swiggy have created an imbalance in the market and will have a meeting in Mumbai on Thursday. They want to bring in a certain code of conduct to create a uniform field for all the competitors, reports Financial Express.

Zomato and Swiggy get an average of 30-40 million orders a month. However, due to the massive discounts and incentives offered to the delivery personnel, they also lose at least $40 million. The playing field has also increased with entrants like Uber Eats and Foodpanda. With this, the competition also increases, reports The Times of India.

"We are happy with the marketplace model. They are bringing restaurants closer to the consumer but they cannot get into exclusives, arm-twisting, promoting their own brands, using their own (search) algorithms," NRAI president Rahul Singh told Financial Express.

"We all have happy hours, end of season sale but not that everything is perpetually on a sale. You are influencing the market forces. You cannot have the entire month saying No Cook December. There should not be dumping of capital and sales of every product at hefty discounts," he added.

The NRAI has sent a letter to the Department for Promotion of Industry and Internal Trade (DPIIT) raising the question on whether the food aggregators have to follow the new rules regarding foreign direct investments (FDI) rules which came into play on February 1. The FDI rules do not allow marketplace entities to sell their products exclusively on its platform.

"E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field," the note issued by DPIIT said.

In addition to this, Zomato has also received funding of Rs 284 crore from US-based Glade Brook Capital Partners.

"Given to press note-2 and it is the best time to have a code in place for the online food aggregators. If food aggregators start to flex their muscles because of the capital they have, then we need a code of conduct. If we can have a code between the aggregators and the association, we would be happy," Singh said.

Singh added that in addition to placing rules and regulations to level the playing field, the NRAI will also discuss if they should file a complaint with the Competition Commission of India.