India’s foreign direct investment (FDI) policy in the e-commerce sector should be enforced in letter and spirit so that global players do not violate rules, according to the Confederation of All India Traders (CAIT), whose secretary general Praveen Khandelwal recently raised the issue at a meeting called by the Department for Promotion of Industry and Internal Trade (DPIIT) to discuss FDI in e-commerce.
The present policy, which allows cent per cent FDI in marketplace e-commerce platforms and prohibits FDI in inventory-based model of e-commerce, is absolutely correct and in line with government's intent to protect small merchants, he said.India's foreign direct investment (FDI) policy in the e-commerce sector should be enforced in letter and spirit so that global players do not violate rules, according to the Confederation of All India Traders, which recently raised the issue at a meeting called by the Department for Promotion of Industry and Internal Trade to discuss FDI in e-commerce.#
Due to creative interpretations about the relationship between marketplace and sellers, global companies are controlling either the sellers on their platform or their inventory, he was quoted as saying by a news agency.
"The control of foreign marketplace platform entities, over the sellers on their platform, enables them to do anti-competitive practices such as predatory pricing and deep discounting through capital dumping that has led to closure of a large number of small merchants/ kiranas leading to job loss for lakhs of people every month," he said.
CAIT has time and again alleged that large multinational e-commerce companies have continued to indulge in prohibited inventory-based model of e-commerce by direct and indirect control over the seller's or inventory.
He also said the government should have the right to seek information and audit the accounts of the entities involved in e-commerce.
"An independent regulatory body should be constituted to regulate the sector and take immediate action on violations such as deep discounting, preferential arrangements with sellers, discriminatory treatments," he said.
The meeting was also attended by representatives of Retailers Association of India (RAI) and All India Consumer Products Distributions Federation. It was chaired by DPIIT secretary Guruprasad Mohapatra.
In a statement, RAI said the FDI rules applicable to retail should be the same across channels and formats of retail to facilitate consumer experience and market balance.
"There is a need to support modernisation of retail in the country, especially since it means increased employment and higher contribution to the country's GDP," it said.
Meanwhile, CAIT submitted its recommendations for the proposed national e-commerce policy in a representation to commerce and industry minister Piyush Goyal.
According to CAIT, the policy must include provision for setting up of an e-commerce regulator having enforcement/ adjudicatory powers.
"Past experiences suggest that complaints are made at a relevant stage against growing e-commerce platforms, however, inaction on the part of the regulators lead to such players growing so big that their anti-competitive business models become the norm of the market. Hence, the framework to be laid down must comprise a timely dispute redressal mechanism," it added.
Further, CAIT said there is a pressing need to maintain and ensure non-discriminatory nature of e-commerce marketplace platforms.
There is also a necessity for enacting a data protection law to ensure that data collected by e-commerce operators is processed and maintained in India and is not used to the detriment of customers, it noted.
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