Industry inputs on FDI in e-commerce to be considered before any decision on policy changes

Meenakshi Verma Ambwani New Delhi | Updated on March 15, 2021

A draft e-commerce policy proposing additional restrictions on FDI in e-commerce to check existing loopholes   -  istock/William_Potter

DPIIT to hold meetings with industry chambers, retailers bodies this week

The Centre is set to hold wide ranging industry consultations this week on possible tightening of FDI policy in e-commerce, including with chambers and retailers bodies.

“Discussions on the need to streamline the FDI policy in e-commerce to close loopholes have been taking place within the government. However, no decision on FDI in e-commerce can be taken without detailed inputs from the industry,” an official told BusinessLine.

The Department for Promotion of Industry and Internal Trade (DPIIT) has invited all industry chambers such as CII and FICCI for their suggestions on March 19 while retailers and traders’ associations, including the Confederation of All India Traders (CAIT) and the Retailers Association of India, will meet officials on March 17, industry representatives have confirmed.

In an inter-ministerial meeting convened by the DPIIT on March 13, a draft e-commerce policy proposing additional restrictions on FDI in e-commerce to check existing loop holes was reportedly discussed.

Also read: Consumer trust in e-commerce intensifies amidst pandemic

While FDI in e-commerce in India is only permitted in market place models, that is in operations where the company can only act as a platform for other retailers to sell their products and not sell its own items, there have been allegations that these rules are being flouted by large players such as Amazon and Flipkart.

CAIT’s plea

According to CAIT, which will participate in the meeting on March 17, companies with FDI need to be urgently stopped from converting their market place operations into inventory-based model of e-commerce by exploiting loop holes.

“Group companies and affiliate of foreign marketplace entities shall not be allowed sell their products on the marketplace platform, directly or indirectly, owned and/or control by the marketplace entity,” CAIT Secretary General Praveen Khandelwal said.

The Retailers Association of India is pitching for a level playing field between online and offline retail.

“We strongly believe that the FDI rules applicable to retail should be the same across channels to facilitate a uniform consumer experience and ensure market balance. We recommend that there should be a level playing field among all formats and channels of retail,” said Kumar Rajagopalan, Chief Executive Officer, RAI.

Published on March 15, 2021

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