FDI is allowed in the marketplace model of e-commerce, while it’s prohibited in the inventory-based model under government regulations.
Published Date – 12:00 PM, Sun – 20 August 23
New Delhi: The proposed national e-commerce policy being formulated by the commerce and industry ministry is in the final stages and no new draft policy will be issued now for seeking views of stakeholders, a senior government official said.
The Department for Promotion of Industry and Internal Trade (DPIIT) on August 2 held a detailed discussion with representatives of e-commerce firms and a domestic traders’ body on the proposed policy.
In that meeting, a broad level of consensus emerged among the concerned stakeholders on the proposed policy.
“Now no draft policy will come. That exercise is over now. We are just getting a final sign off,” the official, who did not wish to be named, said, adding there will be a presentation of the proposed policy at the top level of the government.
On data localisation, the official said that the e-commerce companies would have to follow the law of the land.
Earlier the ministry had issued two draft national e-commerce policies.
The 2019 draft proposed to address six broad areas of the e-commerce ecosystem – data, infrastructure development, e-commerce marketplaces, regulatory issues, stimulating domestic digital economy and export promotion through e-commerce.
The draft had talked about a framework for restrictions on cross-border data flow; collection or processing of sensitive data locally and storing it abroad; measures to contain sale of counterfeit products, prohibited items and pirated content; and review of the current practice of not imposing custom duties on electronic transmissions in the light of the changing digital economy.
Besides, it had suggested provisions on promoting exports through ecommerce; and developing capacity for data storage in India.
The proposed policy would take into account the interests of all stakeholders, like investors, manufacturers, MSMEs, traders, retailers, startups and consumers.
The government is also in the process of framing consumer protection rules for the sector.
Broadly the intention is to make the policy work along with the consumer protection rules and not in conflict with each other.
The e-commerce policy aims to prepare strategies for providing a conducive environment for inclusive and harmonious growth of the e-commerce sector through a streamlined regulatory framework for ease of doing business, adoption of modern technologies, integration of supply chains and enhancing exports through this medium.
Domestic traders body CAIT has time and again demanded roll out of the policy as they had alleged that foreign online retailers violate norms of the FDI (Foreign Direct Investment) in commerce and the government should take action against those who are indulging in malpractices.
The government permits FDI in the marketplace model of e-commerce and it is not allowed in the inventory-based model.
The onus of compliance with the provisions is on the invested company and any violation of FDI regulations is covered by the penal provisions of the FEMA (Foreign Exchange Management Act).
While the RBI administers the Act, the Enforcement Directorate is the authority for the implementation of FEMA and takes up investigations in cases of contravention of the law.
Further, the regulatory framework for the digital/e-commerce sector is still evolving in the country. The sector is governed by the Information Technology Act, Consumer Protection Act, FDI policy on the e-commerce sector, and Competition Act.
The DPIIT is also working on a national retail trade policy.
Domestic traders have also sought a regulatory authority be set up to monitor and regulate e-commerce trade in the country.
