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Dropping Draft Ecommerce Policy A Regressive Step, CAIT Writes To Suresh Prabhu

Dropping Draft Ecommerce Policy A Regressive Step, CAIT Writes To Suresh Prabhu

The government has decided to drop the first draft of ecommerce policy and set up a committee of secretaries to decide on a new set of recommendations

CAIT said that the policy is already delayed for more than three years and if dropped, it will be a blow to the fair trade practices in ecommerce

The second draft of ecommerce policy is expected to come out soon

Ahead of Bharat Bandh as a protest against the Walmart-Flipkart deal, along with the alleged discriminatory treatment against traders on September 28, traders’ body Confederation of All India Traders (CAIT) has written to Union Commerce Minister Suresh Prabhu to oppose the plans of the government to drop the draft of ecommerce policy.

To mark its opposition against dropping the draft ecommerce policy, CAIT has told Prabhu that this is a regressive step as the country’s ecommerce market has considerably grown in size and scale which needs a codified policy and a regulatory authority to regulate and monitor the market.

The traders’ body believes that the ecommerce policy is already delayed for more than three years. If dropped now, it will be a blow to the fair trade practices in ecommerce. This can further encourage ecommerce platforms to continue with predatory pricing, deep discounting and raking in heavy funding, thereby creating an uneven level playing field for the small retailers in the Indian ecommerce ecosystem.

Reports had surfaced that the government has decided to drop the first draft of ecommerce policy and set up a committee of secretaries to decide on a new set of recommendations, with the second draft expected to come out in September 2018.  Still, the government officials have not revealed any update in the media in this regard.

Earlier, CAIT wrote to the Ministry of Commerce saying that the fundamentals of the proposed draft ecommerce policy should not be diluted. Niti Aayog chief Amitabh Kant said that the ecommerce policy should focus on major issues instead of minor ones like discounts.

What’s The Debate Around?

As Inc42 highlighted in a recent analysis, the draft ecommerce bill makes several random proposals such as making the National Payments Corporation of India (NCPI)’s RuPay card (a domestic solution/alternate to Visa and Mastercard) mandatory for payments gateways.

Here are a few debatable pointers in the proposed ecommerce policy framework:

  • It suggests the creation of a government-aided ecommerce platform to promote micro, small and medium enterprises (MSMEs)
  • Ecommerce marketplaces will no longer be allowed to offer deep discounts through their in-house companies listed as sellers
  • The draft Bill recommends a sunset clause on discounts to prevent platforms from directly or indirectly influencing the prices of goods and services
  • It seeks to give more control and power to the founders of ecommerce businesses, rather than investors
  • An online retailer/marketplace should not be allowed to influence the price or sale of products/services — a move that can completely restrict e-tailers from giving discounts
  • Adopt a common ecommerce definition for domestic policy-making and international negotiations
  • Granting preferential treatment and imposing customs duties on etransmission to digital items created in India

To be noted, amid discussions on the policy, the Department of Industrial Policy and Promotion (DIPP) has effectively ruled out foreign direct investment (FDI) in inventory based ecommerce models.

Draft Ecommerce Policy: Sour Eye?

The ongoing debate and the delays around formalising the ecommerce policy in the country is certainly a point of concern, considering the value at which the research analysts have pegged this industry so far.

The IBEF expects the Indian ecommerce to reach $200 Bn by 2026 while Indian government’s Economic Survey 2018 revealed that India’s ecommerce market reached $33 Bn registering a 19.1% growth in 2016-2017. On the other hand, according to a report by marketing research firm eMarketer, the ecommerce sales will rise about 31% to $32.7 Bn in 2018 and the ecommerce market in India is expected to grow to $200 Bn by 2026, largely due to increasing Internet and smartphone penetration.

Ecommerce has been the first step to make a turn towards the new India, grooming with itself sectors such as logistics, digital payments, mobile commerce among others.  The latest $16 Bn acquisition of Flipkart by the US retail giant Walmart, increasing investments of global conglomerates like SoftBank, Alibaba and Tencent among others in the industry, is an example to the burgeoning opportunity, Indian ecommerce has to offer its future generation of entrepreneurs.

Alas! The ongoing debates and meetings between the government stakeholders cannot stop the time from running away from their hands. This is an era where other developing countries in Southeast Asia, particularly Malaysia, Thailand and Indonesia among others have already implemented a set of required ecommerce guidelines and related tax regulations and are continuously working to improvise them.

It’s time, the Indian ecommerce stakeholders should resolve this debate and reach to a concrete set of guidelines in line with the interests of both the local and the global communities looking to leverage this opportunity in the country.

[The development was reported by PTI.]