The government will officially release a new version of its controversial e-commerce policy draft for public comments in the next ten days. Sudhanshu Pandey, a Joint Secretary at the Ministry of Commerce, announced the move at a roundtable in Delhi held by the Confederation of All India Traders, an industry body. The draft that leaked to the press had several provisions that raised objections from established e-tailers like Amazon and Flipkart, such as mandating localisation of personal data, reserving the rights to audit companies’ source codes, reviving the National Encryption Policy, and more. A newer version of this draft will be made public for comments, in line with the government’s Pre-Legislative Consultation Policy.
Traders hail policy, express frustration
Representatives of small traders at CAIT’s roundtable hailed the provisions of the policy, which would place broader restrictions on Flipkart and Amazon, and would change policies in ways that would give small physical traders a leg up in comparison. Even so, representatives showed frustration. Some brought up the point that Press Note 3 by the Department of Industrial Policy & Promotion was not being followed. That note, issued in 2016, disallowed Foreign Direct Investment in B2C e-commerce companies, while leaving the route open for online marketplaces, which Amazon and Flipkart technically are.
On paper, Amazon and Flipkart are not just marketplaces — they are allowed to provide support in “warehousing, logistics, fulfillment, order fulfillment, call center, payment collection, and other services,” per the DIPP. That essentially means that they can essentially run on the inventory model, where they own the goods they sell, while getting FDI. In a note circulated by CAIT, the industry group expressed frustration that even existing rules were not being implemented. Amazon and Flipkart were not present at the meeting. MediaNama’s notes from the discussion are on this Twitter thread:
LIVE: The Confederation of All India Traders is welcoming the National E-Commerce Policy, calling it a 'game changer' for Indian players.
"We want a strong regulator, not a dummy regulator"https://t.co/pT2dFuQxCA
— MediaNama.com (@medianama) August 8, 2018
Govt’s past efforts, rules, and rule-breaking
DIPP had started a consultation process in January 2014, which revealed that industry bodies & MNCs favoured FDI In e-Commerce but traders bodies opposed it. As an outcome of the same, in March 2016, the government disallowed FDI in B2C e-commerce in India, while FDI in marketplaces was allowed to continue.
Rule breaking? Note that E-commerce giant Amazon got a nod from DIPP last year to stock and sell local grocery produce online. It’s worth noting that in its filing with the DIPP on FDI in B2C commerce (which eventually wasn’t allowed), Amazon had said that B2C E-commerce “could” be restricted to non-perishable products. Groceries are perishable products, and Amazon currently sells both perishable and non-perishable items.
Besides FDI, here’s is how FDI defines e-commerce as, and the conditions it defined in 2016.
– In marketplace model, any guarantee and warranty of the goods sold will be the responsibility of the seller.
– E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and will maintain a level playing field.