At a recent virtual meeting chaired by department for promotion of industry and internal trade (DPIIT) secretary Guruprasad Mohapatra to discuss the proposed e-commerce policy, executives representing Indian companies sought an amendment to the foreign direct investment (FDI) policy to widen the scope of group company, while foreign firms wanted no change in policy.
The industry has been asked to send inputs in writing within a week to the government for further consultation, according to Indian media reports.At a recent virtual meeting chaired by department for promotion of industry and internal trade secretary Guruprasad Mohapatra to discuss the proposed e-commerce policy, executives representing Indian companies sought an amendment to the foreign direct investment policy to widen the scope of group company, while foreign firms wanted no change in policy.#
The definition of group should include affiliate and associate companies, while prohibiting direct or indirect control, the Indian side suggested. The draft e-commerce policy too highlights this point.
Speaking out against capital dumping through select sellers on foreign e-commerce platforms, this group stressed on the need for companies to comply with policy provisions. Also, referring to a current retail FDI policy, the Indian firms have asked the government to review a manufacturing clause to prevent misuse by foreign companies.
Some foreign companies have used complex legal structures to exploit loopholes or used creative interpretation of the policy that violate the policy in spirit, a news agency report cited a Reliance Retail representative as saying.
The other side argued there shouldn’t be any change in the policy to ensure stability and consistency in the e-commerce sector. They said the changes in the policy would have an adverse impact on the investment climate. In case of any irregularities, investigative agencies can step in, according to one of the companies in this group.
The demand for a comprehensive e-commerce policy gathered pace after complaints by trader associations that foreign marketplace players such as Amazon were violating FDI norms by investing in select sellers and giving them preference in sales.
The government does not allow FDI in the e-commerce inventory model, i.e., owning products and selling them directly to buyers. After violations were detected, it was mandated that no seller must exceed 25 per cent of the total business on any foreign e-commerce platform.
Pointing out that the government should have a ‘longer-term view’ of e-commerce to keep the policy ‘stable’’, companies with significant global funding said the sector required FDI and many emerging companies including startups were looking for such investments.
They added that policy stability was the need of the hour at a time when many firms were going for public listing.
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