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Representatives from retailers, traders, and small industry associations, gave their inputs on an appropriate Foreign Direct Investment (FDI) policy for e-commerce that would protect domestic interests in a virtual meeting with senior officials from the Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday.
“Enforcing the existing FDI policy that disallowed FDI in inventory-based model is of primary importance to protect the small merchants and kirana shops,” said traders body CAIT.
Clarify definition
“The definition of the inventory-based and marketplace model should be clarified. The e-commerce marketplace entity should not be allowed to sell inventory on a B2B basis that is purported to be sold by them on its platform,” said Praveen Khandelwal, Secretary General, CAIT.
While the government allows e-commerce companies with FDI funding to only operate marketplace models (where they can’t sell their own products), CAIT has put in formal complaints alleging that companies such as Flipkart and Amazon have been violating these rules.
Uniform rules
“Due to creative interpretations about the relationship between marketplace and sellers, these companies are controlling either the sellers on their platform or their inventory,” Khandelwal said.
The DPIIT kicked off its discussions with the industry on Wednesday following an inter-ministerial meeting on March 13 where ways to close existing loopholes in the policy were reportedly discussed.
Retailers Association of India urged the government to ensure a level-playing field and that the FDI rules applicable to retail should be uniform across all channels and formats of business to consumer retail (B2C).
“FDI in retail in India is subject to various extant rules and regulations. There is a strong need to ensure better implementation of the policy in letter and spirit. There needs to be a conducive environment for growth of the retail industry in the country,” Kumar Rajagopalan, CEO, Retailers Association of India said.
The DPIIT will meet representatives from industry chambers including CII and FICCI on Thursday to take forward the industry discussions.
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