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DIPP to not extend FDI in eCommerce policy deadline; CAIT “deeply satisfied”

The Department of Industrial Policy and Promotion has announced that despite receiving requests to extend the 1 February 2019 deadline for Press Note 2 of 2018 (FDI Policy in e-Commerce), it will not extend the deadline.

We have reached out to Amazon, Flipkart and Snapdeal and will update this when we hear from them. (Are you an ecommerce company with a comment about this policy? Reach out to me at sneha@medianama.com.)

(Update: Snapdeal has issues the following statement: “Snapdeal welcomes the government’s decision to enforce Press Note 2 / 2018 guidelines from 1st Feb 2019. Adherence to rule of law will allow India to create a genuine and robust e-commerce sector, which will ensure lasting gains for both buyers and sellers.” – Snapdeal Spokesperson)

Earlier this week, domestic e-commerce firms Snapdeal, Shopclues, Shop101, Limeroad, Wooplr, and Fynd had written to the DIPP and Commerce Minister Suresh Prabhu opposing the deadline extension. The companies also supported the clarifying the rules on FDI in e-commerce.

Meanwhile, Amazon and Flipkart had asked that the deadline be extended by 4 and 6 months respectively. Along with them, US government had voiced its concerns over the new regulations to Indian government officials, and pushed for the regulation to become a bilateral issue between US and India.

  • A Mint report from yesterday stated that both Amazon and Flipkart were hopeful towards a deadline extension, engaging with government officials directly and indirectly through trade bodies.
  • This policy would affect Amazon’s price, selection and convenience for sellers and customers, Amazon’s CFO said during its earnings call, ET reported. Yesterday, Amazon had also started taking down products which were non-compliant, according to this Reuters report, while Flipkart said that it was disappointed, but would be compliant.
  • Earlier this week, ET also reported Walmart-Flipkart as saying that there would be “significant customer disruption” if the FDI in ecommerce policy was implemented, and not delayed by 6 months.

Earlier this week, CNBC reported that the government would release the new ecommerce policy soon, and was awaiting approval from the DIPP and the Cabinet.


CAIT happy over no extension in FDI in ecommerce policy

Today, the CAIT has “expressed deep satisfaction” over the non-extension of the FDI in ecommerce policy. It added that this was the first time in the history of independent India that “the voice of small traders has been heard and acted upon by any Government despite strong and hard lobbying the vested interest e commerce players and US Government.”

CAIT Secretary General Praveen Khandelwal added that the policy needed to be implemented strictly “in its letter and spirit” and asked for a Regulatory Authority to be formed to regulate ecommerce in India. Khandelwal also said that the government should formulate and announce the ecommerce policy with this as well. The group also wants the formation a “Special Investigative Team” to investigate the business model of major ecommerce players, while also implementing the policy on domestic players.

Opposition from offline players and bodies

Throughout January, the Confederation of All India Traders (CAIT) wrote to PM Narendra Modi against any deadline deferral, and urged him and Prabhu not to give in to the “pressure tactics” of global e-commerce companies. CAIT said that the new rules would enable “crores of families who have been adversely impacted economically” to return to business in a “fair environment.”

  • CAIT also wrote to the minister asking that e-commerce players submit certificates declaring their compliance with the new FDI in e-commerce policy.
  • CAIT had also opposed the scrapping of the original e-commerce policy, and asked that it be implemented before the festive season of Diwali. It also opposed Walmart’s acquisition of Flipkart.
  • Last week, the Swadeshi Jagran Manch passed a resolution within its organization asking for an ecommerce policy which would lean towards small retail traders and protect their interests.
  • Earlier this week, the All India Mobile Retailers Association, representing 2 lakh mobile retail stores in the country, wrote to LS and RS members urging the government against any deadline extension.

Our Ecommerce, FDI in ecommerce, and #NAMApolicy on ecommerce event coverage here.

Edit: The story has been updated with a response from Snapdeal.

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