Home >Companies >Start-ups >E-commerce: Karnataka could become first state to roll out policy

Bengaluru: If the suggestions given by the Vision group on industries is taken up seriously, then Karnataka could become the first state in the country to come up with an e-commerce policy.

Kiran Mazumdar-Shaw, chairperson and managing director of Biocon Ltd, has mooted the idea of introducing an e-commerce policy for the state, which houses so-called unicorns including online marketplace, Flipkart Ltd, and cab aggregator, Ola (ANI Technologies Pvt. Ltd) among others.

Shaw’s suggestions could become an action plan as the Vision group meeting on Saturday was chaired by chief minister Siddaramaiah, R.V. Deshpande, state industries minister, top officials and eminent industrialists from the private sector.

The idea for a policy to govern the sector comes at a time when both the Central and state governments are trying to regulate the space and legitimise the business operating in India.

In Karnataka, Amazon’s two-year-old tax issues remains, while Ola and Uber Technologies Inc. have dragged the state government to court over state taxi aggregator rules. The legal tangles have further strained the relationship between e-commerce and the government machinery.

Also read: Dramatic Flipkart townhall reveals India’s start-up churn

Calling it the most ‘un-figured out’ sector, Shaw says that the state government should come out with a far-reaching and progressive policy. “The government is very keen on that (e-commerce policy) and I suggested that Sachin Bansal should spearhead that policy," she said.

To encourage specific sectors to attract investment and provide a road map, Karnataka has formulated Industrial policy 2014-19, Karnataka Aerospace Policy 2013-23, Karnataka Biotechnology Policy 2010 and Karnataka Animation, Visual Effects, Gaming & Comics (AVGC) policy 2012 among others.

The state recently announced its Karnataka Start-up policy 2015-20.

The government and specific committees will have to consult all stakeholders to see how this idea can be taken forward to discuss the finer points affecting the sector.

“Karnataka is home to some of biggest e-commerce firms in the country and the state can take a lead by coming out with an enlightened, forward-looking policy that will benefit all stakeholders especially the consumers and the sellers. We welcome this suggestion and look forward to partnering with the government to take this forward," a Flipkart spokesperson said.

In March, the Union government allowed for 100% foreign direct investment (FDI) in online retail of goods and services under the so-called “marketplace model" through automatic route, seeking to legitimize existing businesses of e-commerce companies operating in India.The new guidelines also prohibits marketplaces from offering discounts and capping total sales originating from a group company or one vendor at 25%.

Amazon has been reaching out to the IT/BT ministry in Karnataka to resolve its tax issues. Officials said that the tax issues currently lie with the finance department but added that all problems relating to warehousing will soon be resolved. Amazon’s warehouse in Karnataka was partially shut over the tax issue which forced the company to invest in neighbouring Telangana.

Jeff Bezos, Amazon’s chief executive, announced an additional $3 billion investment in India at an event attended by Prime Minister Narendra Modi in June. The additional investments will take Amazon’s investments to $5 billion—an opportunity that Karnataka can capitalise on.

Amazon was not immediately available for comment.

Priyank Kharge, IT/BT minister for Karnataka, said that they will consider the proposal and get more stakeholders involved in the process to ensure “everyone is one the same platform". He later added that e-commerce is a new model to the state machinery and a well-defined policy or guidelines could give more clarity to the space and build an ecosystem.

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