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The Centre has decided to go ahead with its decision to implement tightened Foreign Direct Investment (FDI) rules for the e-commerce sector from February 1, 2019, as scheduled, despite objections from large players such as Amazon and Flipkart.
“The Department had received some representations to extend the deadline of February 1, 2019, to comply with the conditions contained in Press Note 2 of 2018 series on FDI policy in e-commerce. After due consideration, it has been decided, with the approval of the competent authority, not to extend the above deadline,” a release put up by the Department of Industrial Policy & Promotion (DIPP) on its website on Thursday said.
The revised FDI rules on e-commerce, announced in December 2018, disallow e-commerce marketplace entities from selling products via firms in which they have an equity interest and also bar them from making deals with sellers to sell exclusively on their platforms.
The rules explicitly state that inventory of a vendor would also be deemed to be controlled by an e-commerce marketplace entity if more than 25 per cent of the purchases of such a vendor are from the marketplace entity or its group companies.
Marketplace entities also cannot take any step to influence the selling price of goods and services on their platforms.
Since FDI in e-commerce is only allowed in marketplace model and not inventory model, the new rules affect large companies such as Amazon and Flipkart .
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