States drag their feet on FDI guidelines for e-commerce

The Centre’s efforts to frame guidelines for foreign direct investment (FDI) in the e-commerce sector and create a level playing field between online and off-line retail following orders from the Delhi High Court is yet to generate response from States.

Not a single State has submitted its recommendations on a suitable policy for the e-commerce sector despite the lapse of the deadline set by the Department of Industrial Policy and Promotion (DIPP) last week.

The DIPP, which frames rules on FDI, has now sent a reminder to all States to conclude consultations with stakeholders and submit their views as soon as possible as guidelines can be framed only after receiving their inputs.

“We are not the Court, so we cannot push States to adhere to our deadlines. We can only ask them to be quick.

“A reminder has been sent to all States to come up with their recommendations,” a government official told BusinessLine .

Commerce & Industry Minister Nirmala Sitharaman had met State industry ministers on July 15 on issues related to e-commerce and the need to have uniform laws for both e-retail and brick-and-mortar retail shops.

The consultations were part of the wider stakeholder discussions (that included industry and bankers) prompted by an order from the Delhi High Court to the government asking it to consider a representation by the Retailers Association of India (RAI) that had alleged discrimination at the hand of policymakers.

The FDI policy allows 100 per cent FDI in business-to-business e-commerce, while banning it in the business-to-consumer segment (except in the market place model where the retailer allows other companies to sell products on its platform).

At the same time, the government is opposed to FDI in multi-brand brick-and-mortar retail. It allows 100 per cent FDI in single-brand retail, but subject to stringent local sourcing norms.

The RAI had alleged that e-commerce companies were claiming to be marketplaces but were engaging in retail taking advantage of lack of concrete guidelines defining their territory.

It had called for a level-playing field between all forms of retail – online and offline (both multi-brand and single-brand).

The delay by States in giving their recommendations for FDI policy in online and offline retail reflects the sensitivity of the issue as the interests of small shop-keepers are at stake.

Even BJP-ruled States such as Rajasthan and Madhya Pradesh, which had implied after the meeting with Sitharaman that they would support FDI both in on-line and off-line retail, have been finding it difficult to frame their responses for the proposed guidelines.

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