Government assures e-commerce giants- no change to law

By

Isabelle Crossley

Published
Dec 28, 2018

No new laws around foreign direct investment (FDI) are being brought in, only a clarification of government policy, the government announced on December 27 to qualm the fears of large e-commerce businesses.

On Thursday, a senior government official explained that “new” regulations around FDI in the Indian e-commerce market will not impact the country’s current regulations as US-owned Flipkart and Amazon may have feared. “There is no message to the foreign investors, only government policy has been clarified,” the official told ET Bureau. “There are no new laws… There should be fair, non-discriminatory trade.”

The official also stated that, as the clarified regulations will not come into effect until February 1, online businesses have ample time to adjust to them.

“Overnight we can’t stop them or expect them to change their business. So, we have given them enough time till February 1,” said the official.

Any violations of the rules will be dealt with by the Enforcement Directorate.

The new FDI regulations state that online marketplaces cannot sell products from vendors they have stakes in. This implies that private label brands, a huge part of the online fashion industry and businesses like Myntra’s revenue, could be called into question. However, the official conceded that the government has yet to clarify this detail.

The draft e-commerce policy will soon follow these FDI regulations and is currently being deliberated by the Department for Industrial Policy and Promotion. The government is expected to create a regulatory body for the sector in order to increase compliance and build consumer trust.