Home >News >India >E-commerce cos divided in stance over FDI policy

Nearly 20 e-commerce companies met officials from the department for promotion of industry and internal trade (DPIIT) on Thursday to discuss the foreign direct investment (FDI) policy in the sector, with representatives seeking effective implementation of the current norms, said three people familiar with the development.

Large e-commerce firms such as Amazon India and Walmart-owned Flipkart requested the government to avoid making further changes to the existing FDI policy. Others including Reliance Industries-owned JioMart, Tata Cliq, eBay and Snapdeal called for clarifications of loopholes that violate the spirit of the FDI policy, and sought tighter implementation of the existing laws, the people said.

The representative of Tata Cliq also called for penalties if the FDI norms are not being followed by any firm, said one of the three people.

Companies such as Ola asked the government to create a level-playing field for all e-commerce firms while representatives of foodtech players Zomato and Swiggy asked for a stable policy outlook.

In what could be one of the last consultations held by the government before it internally reviews the FDI norms, DPIIT has asked all the companies to submit their view points in writing next week.

“It was a divided house, where some players were asking the government to not make any more changes, since the current FDI norms benefit the overall industry. The other players were requesting the government to tighten the rules and ensure that the policy is being followed, in spirit by all players," said the second person, asking not to be named.

The current FDI norms prohibit e-commerce marketplaces from ownership or control over the inventory of sellers on its platform under Press Note 2, 2018. The government also made stricter guidelines that govern FDI in e-commerce firms, barring exclusive tie-ups between e-commerce firms and their vendors.

In a marketplace model, the e-commerce firm is not allowed to directly or indirectly influence the selling price of goods or services, and is required to offer a level-playing field to all vendors.

“There are multiple views expressed by the e-commerce players. We have asked them to provide their comments in writing after which we may issue necessary clarification if any regarding the press note 2 of 2018," a DPIIT official said on condition of anonymity.

Most of the online retailers supported effective implementation of the current FDI policy, rather than further changes. “Flipkart and Amazon’s viewpoint was that any further clarification on FDI could be interpreted as a change in the policy, which would be unsettling and disruptive. These companies also put forth a view that any more changes in FDI could potentially spoil the country’s image for investments. Mostly, everybody else was categorical that while the current policy is adequate, its implementation hasn’t happened and the policy needs to be enforced effectively," said a second person.

The World Bank in its latest World Development Report issued on Wednesday said India’s e-commerce rules may be biased towards local firms, failing to provide a level playing field to foreign e-commerce platforms.

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