Government sets up panel of secretaries to look into e-Commerce issues

The Union Government on September 10, 2018 constituted a group of secretaries to look into the e-Commerce issues. The group will be chaired by the Secretary in the Department of Industrial Policy and Promotion (DIPP).

The group will look into all the issues of e-commerce sector. The first meeting of the group is likely to be held soon.

What led to the formation of panel?

The decision to form the group came after concerns were raised on some proposals of the draft e-Commerce Policy.

The booming online shopping space has largely been functioning without government regulations until a task force led by then Commerce Secretary Rita Teaotia had put together the draft policy.

However, the policy faced criticism over its suggestions dealing with data localisation, curbing deep discounting which has been the mainstay of online retailers, and Foreign Direct Investment (FDI) norms.

Union Minister of Commerce and Industry, Suresh Prabhu in August 2018 tweeted that he had received few concerns regarding the draft e-commerce policy following which, he directed officials to conduct another round of consultation with stakeholders to address them.

Draft e-Commerce Policy

• The initial draft e-commerce policy suggested several steps to promote the growth of the fast growing sector.

• It suggested that online retail firms may have to store user data exclusively in India in view of security and privacy concerns.

• It discussed about adopting a common definition of e-commerce for the purpose of domestic policy making as currently there is no commonly accepted definition.

• The draft notified discounting rules under Press note 3, which says that a group company of an online retailer or marketplace may not be allowed to directly or indirectly influence the price or sale of products and services on its platform. This could potentially restrict online players from offering deep discounts.

• It suggested introduction of a pre-set timeframe for offering differential pricing or deep discounts by e-commerce players to customers.

• It recommended permitting 49 percent Foreign Direct Investment (FDI) in inventory-based business-to-customer e-commerce model. Currently, FDI in such businesses is prohibited and it is allowed only in the marketplace model. The DIPP had ruled out FDI in inventory-based e-commerce.

• It prohibits inventory ownership by e-marketplaces to ensure that ecommerce players do not threaten local players. Amazon, Flipkart and Snapdeal follow a marketplace model where they act as a platform connecting sellers and buyers as opposed to an inventory-based model, where they hold the goods.

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