SUMMARY
Ecommerce companies may seek an extension on the rollout of the Ecommerce FDI Policy
There is no question of extension as the policy has been in place since 2016, says CAIT
It also sought clarification over the sale of private brands by ecommerce companies
The Confederation of All India Traders (CAIT), an all-India traders’ body, has reportedly written a letter to Department of Industrial Policy & Promotion (DIPP) secretary Ramesh Abhishek opposing the extension of the February 1 deadline for implementation of the ecommerce foreign direct investment (FDI) policy.
This move comes after recent reports said that ecommerce companies, including Amazon and Walmart-owned Flipkart, will seek an extension on the deadline. According to the etailers, they will have to study the new rules in detail and may also have to introduce operational changes, which will take time.
According to reports, CAIT’s secretary general Praveen Khandelwal said that stipulating a date of implementation is an error on the part of the DIPP as the ecommerce Foreign Direct Policy (FDI) had been introduced in 2016. Hence, there cannot be a possibility of an extension.
In the letter, the traders’ body said it is looking to make the government aware before it agrees to such a “malicious agenda,” referring to requests by ecommerce companies to postpone the implementation of a stricter ecommerce regulatory framework.
In September 2018, CAIT wrote to the minister of commerce and industry and civil aviation, Suresh Prabhu, arguing against the government’s plans to drop the draft of ecommerce policy when a debate on the new rules was going on.
The traders’ body has also sought clarification on the sale of private labels and brands by ecommerce platforms, as the DIPP had earlier said that private labels of online platforms would not be affected by the new rules.
According to CAIT, this is a “loophole” as allowing the sale of private labels is a contradiction to the aim of ensuring a level playing ground for online and offline sellers.
The Ministry of Commerce and Industry had publicly released the Ecommerce Draft policy in August, 2018, which was aimed at promoting the sale of made in India goods through ecommerce platforms.
The draft policy is also focused on eliminating deep discounts offered by ecommerce players, which affects the sale of products through offline retail stores. In order to ensure a level playing field between the online and offline sectors, the government is looking to put in measures regulating online discounting policies and preferred sellers.
Under the new ecommerce FDI policy, all online sale of goods produced in India will be promoted through a limited inventory-based B2C model. Here are some other provisions of the policy:
- About 49% of FDI may be allowed in inventory-based ecommerce companies
- Etailers will be allowed to offer their own brands as long as they are made in India
- Foreign ecommerce websites are to be brought on a level playing field with their Indian counterparts
- Ecommerce companies will not be allowed to sell products on its platform in which it owns a stake
- They will not be allowed to offer deep discounts through their in-house companies listed as sellers
While etailers have expressed their reservations regarding the new rules, the offline retail market has welcomed the move.
Recently, in an interview with ET, Future Retail’s Kishore Biyani, who believes that online cannot exist without the offline, commented on the policy shift, saying that this brings clarity on the issue as some companies have been taking advantage of the ambiguity in the policy.
[The development was reported by ET.]
