Sector to govt: Do not define e-commerce, just make it free

DIPP has been wanting to define e-commerce and formats such as marketplace and inventory-led models followed by companies

Fearing further regulation in online retail, representatives of small and medium-sized e-commerce companies on Friday sought a review of the government’s plan to define marketplace models. The group, led by E-commerce Coalition secretary Aamir Jariwala, filed a representation to the department of industrial policy and promotion (DIPP), expressing apprehension that any definition for the existing e-commerce marketplace models might lead to escalating the level of regulation in the sector.

The coalition has stressed the government should only liberalise the e-commerce sector now, allowing foreign investment in inventory-led companies, too.

DIPP has been wanting to define e-commerce and various formats such as marketplace and inventory-led models followed by the companies, due to grey areas in policy rules, especially related to foreign investment norms.
 

Currently, foreign direct investment (FDI) is not allowed in India, but most e-commerce players are funded by foreign money through the marketplace model. FDI rules don’t apply to the marketplace format as it’s treated as a technology platform or a business-to-business model.

However, the ambiguity in rules has resulted in regulatory clampdowns. At present, the Delhi High Court is hearing a petition against 21 e-commerce firms over alleged breach of FDI rules. The court has asked the Centre to file a report on the investigation of FDI in 21 e-commerce companies within four weeks.

On Friday, the E-commerce Coalition told the government that the creation of any definition of e-commerce should take into consideration that it is a technology platform, which acts as a bridge between sellers and their consumers. “The platform does not conduct trading itself, though it can also offer value-added services like logistics, fulfilment, etc. The platform should not face restrictions on the number of sellers that can conduct activity on it. This would be against the spirit of e-commerce and the ease-of-doing business.’’

Commenting on the issue, Jariwala said, “While the government is within its rights to create definitions for the various models of e-commerce, we request this exercise sector."