New Draft Ecommerce Policy May Not Call For Sector Regulator: Report

After a thunderous start to 2019 for ecommerce sector with changes in FDI norms, the Department for Promotion of Industry and Internal Trade (DPIIT), earlier known as Department of Industrial Policy and Promotion (DIPP), continues to reconfigure the regulatory framework around the Indian ecommerce.

Finalising the new draft ecommerce policy, DPIIT is now reportedly looking to excuse itself from setting up a sector regulator but continue to include the recently updated changes in FDI policy which have created operational problems for online marketplaces Amazon and Flipkart.

On December 26, 2018, the government notified changes in FDI rules for ecommerce which prohibits large online marketplaces from controlling inventory of its partner sellers and also from having any exclusive product launches. The changes were set to come into effect from February 1, 2019.

Even though the government received requests for extensions, the DPIIT refused to provide any such extension and the changes came in effect from February 1. Since then, Amazon and Flipkart, have seen as much as a third of sales volume disappear on their platforms.

On Monday (February 4, 2019), minister of state for Commerce and Industry C R Chaudhary, filed a written reply to the query on changes in FDI for ecommerce and its impact saying, “The FDI policy on ecommerce has remained unchanged. Better enforcement of this policy will contribute significantly to the growth of this sector over the medium and long term.”

With the changes already creating trouble in the ecosystem, DPIIT is reportedly set to hold a meeting with stakeholders including those companies and groups that were opposed to the tighter FDI guidelines before finalising the policy.

The draft ecommerce policy was made public in August by the Ministry of Commerce and Industry. However, the policy draft faced resistance from many departments and ministries, which felt that the recommendations exceeded the commerce department’s brief.

Suresh Prabhu, union minister of Commerce & Industry and Civil Aviation, later set up a new interdisciplinary panel to look into the feedback and comments made by ecommerce stakeholders on the draft. The old draft ecommerce policy had also called for the sector regulator.

In a Lok Sabha reply, Chaudhary also highlighted that a think tank on ‘Framework for National Policy on ecommerce’ was constituted by the department of commerce and a task force under the think tank was set up for preparing recommendations for India’s National Policy on ecommerce.

“Department of Commerce formulated a draft policy document titled “Electronic Commerce in India: Stakeholder Recommendations Received for a National Policy Framework” after consulting various stakeholders including concerned Ministries/ Departments, State Governments, apex industry chambers, Associations and other organisations taking into consideration their views/comments. The views and suggestions of various stakeholders were considered while drafting the above policy document,” he said.

With the recent changes in ecommerce and the dedicated policy underway, the ecommerce landscape in India is bound to change, but if it is for the good or the bad remains to be seen.

[The development was reported by ET.]