The upcoming policy to govern the country’s e-commerce is unlikely to provide for a separate regulator for the sector but will incorporate the recently updated foreign direct investment (FDI) norms.
The Department for Promotion of Industry and Internal Trade (DPIIT) will hold a meeting with stakeholders including those companies and groups that were opposed to the tighter FDI guidelines, which became effective February 1, before finalising the policy. The government had turned down demands for an extension of the deadline.
“We will have a stakeholder meeting soon where FDI issues would be discussed. However, we are not sure if a separate regulator will be set up for e-commerce,” said a senior official.
The DPIIT, which was until recently the Department of Industrial Policy and Promotion (DIPP), has been made responsible for the promotion of internal trade, including retail trade and welfare of traders and their employees, which was the mandate of the consumer affairs ministry earlier. In September last year, it was made the nodal department for the government’s ecommerce initiatives.
“With both ecommerce and retail trade in the department’s ambit, another agency is not required to regulate the sector,” said another person. A draft ecommerce policy released last year had called for a sector regulator.
However, the recently tightened FDI rules will make it to the policy along with more clauses to plug any loopholes that may be exploited by online platforms to engage in multi-brand retail.
DIPP had issued a Press Note in December barring marketplaces from selling products from entities in which they have an equity interest and from entering into a deal with any brand to sell exclusively on their platforms.
It also stipulated that the inventory of a vendor will be deemed to be controlled by the marketplace if more than 25% of the vendor’s purchases are from the marketplace entity, including its wholesale unit. The marketplace entity or its group companies cannot have control over inventory under the FDI rules.
Besides Amazon and Walmart-owned Flipkart, which were the most impacted by the tighter rules and had sought an extension of the deadline, the government had faced opposition from the American Chamber of Commerce in India, the Internet and Mobile Association of India and the US-India Strategic Partnership Forum.
While homegrown firms Snapdeal and ShopClues had favoured the new norms, the Confederation of All India Traders (CAIT) has pressed for the guidelines to apply to local firms as well.
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