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Govt: No proposal under consideration to control stake of foreigners in India’s e-commerce

The government currently doesn’t have any proposal to control the ownership stake of foreigners in India’s e-commerce sector while it continues to have ‘detailed deliberations’ with different stakeholders on the upcoming e-commerce policy. “No such proposal is under consideration in the Department presently,” said Minister of State for Commerce and Industry Som Parkash in a written reply to a question in the Rajya Sabha on Friday. The minister was answering the question of whether the government has any proposal to control the ownership stake of foreigners in the e-commerce sectors. Parkash said that valuable suggestions have been received from many stakeholders and that detailed deliberations are being held to finalise the e-commerce policy.

The minister also informed that no data is maintained by the government on the year-wise details of tax subsidy granted to e-commerce companies in the last five years as “there is no separate category for entities as e-commerce companies as per the Income-Tax Act, 1961.”

The e-commerce policy, which has been in the works since early 2019, is likely to be rolled out this year as the government looks to regulate the sector that has witnessed billions invested into it by foreign and domestic investors over the past decade and more, and multiple internet businesses valued at $1 billion or above. The government, in its latest upcoming draft of the e-commerce policy, which was leaked last week and seen by Financial Express Online, had asked companies in the e-commerce sector, which is led by Flipkart and Amazon, to ensure equal treatment of all sellers and vendors registered on their platforms. It also asked them not to adopt algorithms that result in prioritizing select vendors and sellers.

In a meeting held between the e-commerce companies, industry associations, and DPIIT Secretary Guruprasad Mohapatra on Friday, FICCI said that if the government or authorities feel that any company irrespective of their ownership are found violating the law, the government may speak with them directly and take appropriate action. A copy of the letter signed by FICCI President Uday Shankar and sent to Mohapatra on Friday was seen by Financial Express Online.

Traders’ body CAIT has been alleging violation of FDI norms by e-commerce companies such as Amazon and Flipkart over the past few years. In a letter sent to Commerce Minister Piyush Goyal on Thursday, CAIT called for replacing Press Note No.2 of FDI Policy with a fresh one. CAIT suggested that in order to clearly demarcate the boundary between “marketplace model” and “inventory-based model”, any type of direct/indirect, equity or economic relationship, between “e-commerce marketplace entity” and “seller on its platform” should be prohibited. For this purpose, any type of relationship between “marketplace entity” and “Seller”, whether direct or indirect, equity or economic or otherwise should be strictly prohibited. Financial Express

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