The e-commerce policy being drafted by the Centre is taking time as a multitude of issues need to be addressed like data, consumer interest, export promotion and protection of small traders which require extensive consultation, according to Department for Promotion of Investment and Internal Trade (DPIIT) Secretary Guruprasad Mohapatra, who is leading the effort. In an e-mail interview with BusinessLine , Mohapatra talks about wide-ranging issues from FDI policy review and the Atmanirbhar Bharat scheme, to incentives for start-ups and the pandemic. Excerpts:

The government has liberalised FDI rules in a number of areas but the real estate sector seems to be waiting for more. Can something be expected?

The review of the FDI policy is an ongoing process to ensure that India remains an attractive investment destination. Presently, FDI is permitted up to 100 per cent under the automatic route in most sectors/activities. While it is prohibited in real estate business or construction of farm houses, 100 per cent FDI under the automatic route (subject to stipulated conditions) is already allowed in construction-development projects, completed projects for operation and management of townships, malls/shopping complexes and business centres and real-estate broking service.

However, Limited Liability Partnerships (LLPs) engaged in these activities are not permitted to avail FDI. To broaden the scope of Indian entities eligible to receive FDI in the construction-development sector and provide flexibility, the DPIIT is examining the suggestions to allow foreign investment through LLPs engaged in the construction-development sector.

India’s FDI inflow has risen this year (FDI equity inflows increased 15 per cent to $30 billion in April-September) despite the disruptions caused by Covid-19 pandemic. Is this growth sustainable?

The FDI inflow has shown an increasing trend even during the difficult phase of disruptions caused by Covid-19 and with the economic activities rebounding, it is expected that the FDI inflows to India in 2020-21 will sustain the upward trend. FDI in India has shown a long-term growth trend and in the post pandemic period, India’s large market will continue to attract foreign investments.

Further, FDI is largely private-business driven, which depends on a host of factors such as availability of natural resources, market size, infrastructure, general investment climate as well as macroeconomic stability and investment decision of foreign investors. But we are quite upbeat on FDI and FPI inflows.

You recently said that MNCs should benefit from the Atmanirbhar campaign as initiatives were available for all products manufactured in India irrespective of the manufacturer. What kind of interest have foreign MNCs shown towards these schemes so far?

India has a non-discriminatory policy towards all investors and welcomes investments from various quarters, including MNCs. Some MNCs have been in India for several decades and are almost household names. Hence, all policy benefits are available to all, including MNCs subject to the eligibility criteria. We normally see a lot of interest coming in the field of electronics, IT, data analytics, renewable energy, medical devices, mobiles and computing devices from various MNCs and global investors in general.

Which sectors will benefit most from the Production Linked Incentive (PLI) scheme extended so far? Is there a timeline for implementation and are more sectors in the offing?

The PLI scheme, aimed at enhancing India’s manufacturing capabilities and exports, will be implemented by the ministries/departments concerned and meet the overall financial limits prescribed. The largest financial outlay has been given to the PLIs on automobile and auto components and on advanced chemistry cells (ACC). Feedback received from implementing ministries/departments indicates that the EFC (Expenditure Finance Committee) notes for all the schemes will be prepared within stipulated timelines and Cabinet approval will be sought very soon. Thereafter, schemes will be notified and implemented within three-four months.

When will the DPIIT put up a fresh draft of the e-commerce policy? What are the areas that still need to be ironed out?

The draft e-commerce policy is under consultation with various stakeholders. There are important issues like data, consumer interest, export promotions, protection of small and unorganised traders and hence this requires extensive consultation with various stakeholders. These discussions are on and once we arrive at a satisfactory framework, we will bring out the new draft e-commerce policy.

The Confederation of All India Traders (CAIT) has sought action against e-commerce majors Amazon and Flipkart for alleged violation of FDI and FEMA norms. What can be done about it?

FDI in e-commerce is allowed in India subject to certain conditions. Anybody who violates any legal provision is liable to face the consequences. All complaints/suggestions that we receive are always looked into by us for appropriate response.

Where are discussions on the proposed credit guarantee scheme and seed fund scheme for start-ups poised?

One of the biggest challenges faced by start-ups is access to early-stage debt to finance their capital requirements for growth. The Startup India Action Plan of 2016 envisages a credit guarantee scheme to catalyse entrepreneurship through credit to innovators and encourage banks and other lending institutions in the ecosystem for providing venture debt to startups. The DPIIT is now in the process of notifying a Credit Guarantee Scheme for Startups (CGSS) with an outlay of ₹2,000 crore to provide the much-needed debt funding to start-ups.

It is essential to provide seed funding to start-ups with an innovative idea to conduct proof of concept trials. The capital required at this stage often presents a make or break situation. The DPIIT is now in the process of creating a Startup India Seed Fund Scheme (SISFS) to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market entry, and commercialisation. Both the schemes have recently been approved by the Ministry of Finance and we hope to notify them soon.

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