DIPP to restart consultations on e-commerce policy

By

Isabelle Crossley

Published
Nov 26, 2018

The Department of Industrial Policy and Promotion (DIPP) is about to restart discussions on an upcoming e-commerce policy that will tackle 15 issues in the industry but will not touch on foreign direct investment (FDI).

A draft e-commerce policy is in the works from the DIPP after the issue was transferred to it last month. “Formal inter-ministerial consultations will start soon... There are a number of issues faced by the sector that will be in focus,” said a senior government official to the Economic Times.

As India’s e-commerce market is growing at a fast pace and becoming an increasingly large part of the global e-commerce market, the government is keen to clarify a number of issues. The issue was first addressed by the Commerce Ministry but, due to a stalemate in negotiations, the Union Government passed it on to the DIPP in October.

The policy will aim to harmonise the myriad regulations in the sector under one policy. Issues include consumer protection, data safety, and competition laws.

However, FDI will be left out for now as it had elicited a negative response from business and trader’s associations when the Commerce Ministry aimed to tackle it. The Ministry initially allowed up to 49 percent FDI in e-commerce platforms that are managed by Indians and sell 100-percent-made-in-India products.

Currently, 100 percent FDI is allowed under the automatic route for business to business e-commerce companies and market place e-commerce companies but is not allowed for an inventory-based model. This issue was a hot topic with the US business Walmart’s 77 percent acquisition of Flipkart in summer.

Another issue in the e-commerce industry is deep discounting. Where the policy will leave out FDI, it will tackle this and is expected to create a singular regulatory body to do so.