Panel of secretaries reviewing e-commerce draft to focus on FDI

Amiti Sen New Delhi | Updated on September 11, 2018 Published on September 11, 2018

India’s e-commerce market, currently valued at about $ 27 billion, is one of the fastest growing in the world

Recommendation favouring data localisation may not be tinkered with

Most recommendations of the draft e-commerce policy, especially those related to dilution of Foreign Direct Investment (FDI) norms for online players, will be reviewed by the panel of secretaries on e-commerce in its first meeting on Thursday.

The only proposal that may not be tinkered with is the one favouring data localisation, according to a government official.

“The panel of secretaries will look at the entire gamut of proposals in the draft with a special focus on those related to FDI norms as it has created a lot of discontent amongst the domestic industry. The proposal favouring data localisation, however, may not be taken up as this line has also been taken by the Sri Krishna Committee on e-commerce,” the official told BusinessLine.

Task force on e-commerce

A task force on e-commerce, headed by the Commerce Secretary, had finalised the initial draft of the proposed policy on e-commerce in July following extensive consultations with other Ministries and industry representatives, but the recommendations of the draft had led to a lot of protests from various interest groups including the industry and sections of the government.

Following a meeting in the Prime Minister’s Office, it was decided that a panel of secretaries, headed by the DIPP Secretary, should be constituted to iron out all the contentious areas.

“It was decided to make the DIPP Secretary the chairperson for the panel as the FDI-related issues in the draft policy would need close scrutiny and the DIPP, being the nodal body for FDI issues, is most familiar with nuances,” the official said. Other members of the group would include secretaries of the Ministry of Electronics and Information Technology and Department of Commerce. Officials from the Department of Economic Affairs and NITI Aayog would also be in the panel.

India’s e-commerce market, currently valued at about $ 27 billion, is one of the fastest growing in the world.

Comprehensive policy

The government wants to come up with a comprehensive e-commerce policy as it is facing intense pressure to get into negotiations to liberalise the sector at various bilateral and regional forums, including the World Trade Organisation, and in the absence of a proper domestic policy it is difficult to take a well-considered stand on the matter.

The draft recommended permitting 49 per cent FDI in inventory-based business-to-customer e-commerce model. Currently, FDI in such businesses is prohibited and is allowed only in the marketplace model.

The domestic industry, including traders, had argued that this contradicts the government’s stated intent to strengthen Press Note 3, which bars any FDI in inventory-based online retail.

The suggestion of the taskforce on e-commerce of introducing a sunset clause for offering deep discounts to customers has made big players unhappy.

Influence on sale price

It also proposed that the restrictions on e-commerce marketplace to not directly or indirectly influence the sale price of goods and services, be extended to group companies of the e-commerce marketplace.

“The Ministry has received complaints including ones from foreign players such as Amazon and Walmart on the proposals in the e-commerce draft policy which they think will hurt their interests,” the official said.

Published on September 11, 2018
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