India’s national government has taken several major policy decisions in recent months. The government appears to be trying to walk the discussion of constructing a more investment-friendly environment in the country, from the repeal of the much-maligned retrospective tax law to the asset monetization idea, also is known as the National Monetization Pipeline (NMP), and a relief package for the ailing telecom sector. Other major reform initiatives that can potentially boost the post-covid economic resurgence and propel the economic market could include the development of a ‘bad bank’ to alleviate the nation’s banking system of bad-load stress and the privatization of Air India.
These reforms and policy changes, combined with a slew of digital-first unicorn initial public offerings (IPOs) and increased retail engagement in Indian stock markets, point to a bright future for the Industries in India. The goal of these bold changes in policy is simple: to create a favourable business environment by reducing investment problem areas.
Estimated Growth of E-commerce
In the past, two departments have produced draughts that are not in sync with one another, causing businesses to be confused.
The DPIIT’s most recent draft of the policy is likely to focus on establishing a regulator, creating an eCommerce law, and enacting sanctions for noncompliance. It will cover all eCommerce businesses, both Indian and foreign-funded.
The prior draft of the e-commerce legislation primarily established standards for the use of data for the development of the industry by Indian and foreign-funded enterprises, with the goal of preventing data misuse and access.
The Ministry of Consumer Affairs published a draught of e-commerce regulations for public comment in June. They wanted to make it illegal for related organizations to sell on eCommerce sites, as well as limit flash sales. Top industry groups were against it, and the finance and corporate affairs ministries, as well as the government’s public policy, think tank, Niti Aayog, were against it.
However, the latest version is intended to cover all eCommerce companies, both Indian and foreign-funded, and to place a greater emphasis on consumer protection.
According to forecasts from accounting and consultancy firm Grant Thornton, the eCommerce sector will rise to $188 billion by 2025, up from $64 billion in 2020.
Small traders and offline merchants have criticized the internet retail sector, which is one of the country’s largest job generators, for alleged exploitative pricing, preferential treatment for associated parties, and violations of many regulations.
Update so far:
According to people familiar with the development, the government will soon distribute revised versions of the e-commerce policy and e-commerce rules to spell out comprehensive guidelines for all online transactions, covering all digital commerce and service providers, such as marketplaces, ride-hailing companies, ticketing and payment companies. The idea would be that the two drafts will be released at the same time and will be in sync, decreasing the possibility of misinterpretation.
Government’s say on new rules.
The government may consider a few clarifications to ensure that eCommerce companies work in the true spirit of the rules and consumers have a free choice, as there are no adjustments to the FDI rules per se, according to commerce and industry minister Piyush Goyal, who stated in February that the government is proposing some explanations to make sure that eCommerce businesses and individuals work in the true spirit of the law and customers get a free will.
Goyal said the current FDI policy in the eCommerce sector was “strong and well-designed.” Nevertheless, there have been some complaints from consumers and small businesses regarding eCommerce companies’ behaviour, which are being investigated.
FDI norms remain a roadblock
In March, the government considered extending restrictions imposed on large eCommerce marketplaces like Amazon and Walmart-owned Flipkart to their associates and related parties in order to combat alleged FDI norms violations and anti-competitive behaviour by these companies.
Nodal Officer rule
According to a notification published by the consumer affairs ministry, a new sub-rule included in the Consumer Protection (E-Commerce) Rules, 2020 went into effect on May 17. Ecommerce enterprises will be required to employ a nodal person to ensure compliance under the new rule. The government formally asked e-commerce enterprises to do so two days later.
Ban on Sales
New ideas, including a prohibition on “flash sales”: The Consumer Protection (E-commerce) Rules, 2020, were first notified in July, and the ministry of consumer affairs suggested revisions to them in June. A ban on “flash sales” and restrictions on private labels was among the proposed reforms. The Centre’s “clarification” later in June, which stated that the new guidelines allowed e-commerce portals to hold traditional sale events while prohibiting “only unique big sales or back-to-back offers,” added to the confusion.
