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The Confederation of All India Traders (CAIT) has written to Commerce & Industry Minister Suresh Prabhu objecting to the reported move to drop the proposal to frame an e-commerce policy.
“It will be a regressive step and will give a loud indication of the government succumbing to the pressure of MNCs and the vested interests of online companies that want the e-commerce market to remain a free playing ground. We strongly object to any such proposal (of dropping the draft policy),” an official release of the CAIT said.
The traders’ body was reacting to senior officials in the Department of Industrial Policy & Promotion (DIPP) and NITI Aayog commenting at an interaction with the media that there was no need for an e-commerce policy as the Secretaries panel on e-commerce, constituted recently, can take care of all policy related issues.
Commerce Ministry officials, however, told BusinessLine there was no official communication on scrapping the draft policy yet. “We have not received any communication stating that the proposed policy will be dropped. However, the fact that a panel of Secretaries has been constituted to look at contentious issues is a clear indication that a policy will not be announced any time soon,” an official said.
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 after consultations with other Ministries and industry representatives. The recommendations of the draft policy, which got leaked before being finalised and put up on the Ministry’s Website, led to protests from all quarters including foreign investors, domestic retailers, traders and certain sections of the government.
The panel of secretaries, headed by the DIPP Secretary, was constituted to look into problem areas such as the proposals on FDI and discounts, following a meeting in the Prime Minister’s Office.
Growing in size
In its communication to the Commerce Minister, CAIT said the e-commerce market in India had considerably grown in size and scale and needed a codified policy and a regulatory authority to regulate and monitor it. The idea behind framing an e-commerce policy was to have codified rules and regulations, including definitions, so that Indian negotiators could negotiate effectively on the sector at bilateral forums and the World Trade Organization.
“With the general elections round the corner, the Centre may not have an appetite to rub too many interest groups the wrong way. That is why policy makers are stepping cautiously,” the official said.
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.
According to a report of eMarketer, a marketing research group, online sales will rise about 31 per cent to $32.7 billion in 2018 and the e-commerce market in India is expected to grow to $200 billion by 2026.
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