The government on Wednesday shifted the responsibilities of welfare of traders and their employees from the consumer affairs ministry to the commerce ministry, even as it finalizes a package for small traders likely to be announced in the interim Budget on Friday. The Department of Industrial Policy and Promotion (DIPP) under the commerce ministry will hold these responsibilities, under the new name of Department for Promotion of Industry and Internal Trade (DPII).
With logistics already part of the commerce department and the Foreign Investment and Promotion Board (FIPB) under the finance ministry abolished, the Suresh Prabhu-led commerce and industry ministry, which houses DPII, is set to become even more powerful.
In 2016, the Narendra Modi government renamed the Department of Disinvestment as the Department of Investment and Public Asset Management (DIPAM), expanding its ambit to effective utilization of resources of public sector enterprises.
In a Gazette notification on Wednesday, the Cabinet secretariat renamed DIPP as the Department for Promotion of Industry and Internal Trade. The government also tasked it with promotion of internal trade including retail trade, which may make it the regulator for retail trade, including e-commerce. Two responsibilities—“matters relating to facilitating Ease of Doing Business" and “matters related to start-ups"—which the DIPP was already handling have now been formally added to the statute.
The move assumes significance at a time the DPII is formulating an e-commerce policy and has announced changes in the FDI regulations for e-commerce companies, which has put it at loggerheads with online retail trade behemoths like Amazon and Flipkart.
On 26 December, the commerce and industry ministry surprised everybody with fresh regulations that could throw a spanner in the works in India’s thriving e-commerce marketplaces. The changes which will take effect on 1 February are five-fold. First, marketplace entities cannot buy more than 25% from a single vendor; secondly, marketplaces will not directly or indirectly give discounts on products; thirdly, entities in which there is equity participation by the marketplace entity cannot sell their products on the platform run by the marketplace; fourthly, an e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform; and fifthly, marketplaces will have to submit a compliance report to the Reserve Bank of India by 30 September every year.
The changes are believed to be a political move ahead of the elections to assuage the trading community which has been hit by demonetisation and the hasty implementation of the goods and services tax.
Traders are also miffed with the Modi government’s e-commerce policy as online trading platforms were harming their businesses by providing deep discounts.
E-commerce players are lobbying with the government to at least defer the 1 February deadline for the implementation of the regulatory changes.