Government Sets Up Separate Committee To Examine FDI Issue In Ecommerce

FDI in ecommerce has become a maze to the Indian government. In order to solve it, the Indian government has reportedly set up a separate committee on July 12 to examine issues related to FDI in ecommerce, said commerce and industry minister Piyush Goyal in a written reply to a question posed in the Lok Sabha on July 24.

“A committee has been constituted on July 12 under Additional Secretary, Department for Promotion of Industry and Internal Trade (DPIIT) with members from the Department of Commerce, Department of Consumer Affairs, Department of Commerce, Department of Consumer Affairs, Department of Legal Affairs and Ministry of MSME to examine issues related to FDI in ecommerce and give its suggestions,” he said.

The new FDI policy came into effect from February 1, 2019, which states that a vendor will be considered “controlled” by an online marketplace operator if it sources more than 25% of its merchandise from an entity related to the ecommerce marketplace.

The move aims to target deep discounts being offered by ecommerce marketplaces having heavy war chest like Amazon, Flipkart (owned by Walmart) to level the playing field with the local retailers.

It had also barred ecommerce marketplaces from directly or indirectly influencing the cost of a product sold on the platform. Also, ecommerce marketplaces were barred from mandating any seller to exclusively sell on its platform.

In a report to the US government, Walmart stated that India’s new FDI in ecommerce policy is regressive and creates an unfair playing field between foreign and domestic enterprises. It also recommended that India extend the deadline for the implementation of its new ecommerce guidelines by a six-month period. However, the company also claims to be committed to complying with this and all other Indian laws and regulations.

The government is in continuous discussions with the industry stakeholders to put the right foot forward. Last month, Goyal had met with the representatives of Indian ecommerce companies to carry out in-depth discussion on ways to boost the India ecommerce market, which would benefit small Indian retailers and ecommerce consumers. The meeting attendees included Amazon, Walmart-owned Flipkart, Snapdeal, Shopclues, Swiggy, Zomato, UrbanClap, Udaan, MakeMyTrip, and Yatra.

A draft national ecommerce policy covering various areas of ecommerce has been prepared and placed for comments in the public domain. The Government has also introduced the National Policy on Electronics (NPE) and National Policy on Software Products (NPSP) in 2019 for the growing digital economy.

[The development was reported by ET.]