‘New FDI norms will ensure fair play’

The new Foreign Direct Investment (FDI) guidelines that will come into effect from next month are expected to ensure a level playing field in the country’s e-commerce sector, though a prominent trade body has expressed apprehension that giant e-commerce firms will try to put pressure to stall the implementation of the new FDI norms.

According to the Confederation of All India Traders (CAIT), one of the country’s prominent trade bodies, the revised regulations are stricter and will force e-commerce giants such as Amazon India and Flipkart to redraw their standard operating procedures made for their business operations in India. In December last year, the Centre had revised the regulations that govern FDI in e-commerce firms. The Department of Industrial Policy and Promotion (DIPP) updated Press Note 3 that provides guidelines on the functioning of an ecommerce marketplace.

As per the DIPP press note, the revised regulation prevents exclusive tie-ups between e-commerce firms that follow the “marketplace model” and vendors using their platform. In a “marketplace model”, the e-commerce firm is not allowed to directly or indirectly influence the sale price of goods or services, and is required to offer a level playing field to all vendors.

The move of implementing the revised regulations in the e-commerce sector is being seen as one to appease the trading community ahead of this year’s general polls.

While the DIPP has already issued Press Note 3 stating that the new regulations will come into effect from February this year, CAIT has raised apprehensions that giant ecommerce firms are trying to put pressure on the government to stall the implementation of the new FDI norms. The CAIT has also sent a presentation to the Central government, including Prime Minister Narendra Modi, requesting him not to come under any pressure aimed at stalling the implementation of the new FDI regulations. The CAIT has welcomed the new regulations and termed the new changes as “game changer” for the e-commerce sector of the country.

Praveen Khandelwal, National General Secretary of CAIT, said; “It is appreciated that the Central government has recognised the illusion created by global e-commerce players in the country and has come up with new regulations to prevent all kinds of malpractices, including predatory pricing, deep discounting, loss funding and exclusivity in the e-commerce market. However, we have observed that several global e-commerce players, in association with some Chambers and organisations with vested interests, are using all kinds of pressure tactics to halt the new FID regulations to continue the game of unethical business.”