The finance ministry added a total of 12 objections to the new e-commerce rule. The finance ministry’s economic affairs department said the rules seem excessive and will hit a sector that could boost India’s job creation and tax revenue.
The government’s plan to tighten rules in India’s fast-growing e-commerce market has sparked internal dissatisfaction. In a memo reviewed by the Reuters show, the finance ministry described some of the proposals as “excessive” and “without economic rationale.”
The global retail heavyweights from Amazon to Flipkart and market-driven high-stakes-policy-making memoranda featuring domestic players such as Reliance industries and tata group give a rare glimpse. Grant Thornton has forecast that the sector will be worth $188 billion by 2025.
It’s unclear; a dozen objections from the finance ministry will eventually be reflected in the proposed rule change or not. It was first published in June. But observers from influential government forces say the allegations in the upper echelons of Prime Minister Narendra Modi’s administration will not go unheeded.
Suhan Mukharjee, the managing partner of PLR Chambers in India, said If the finance ministry raises such concerns, it will probably motivate policy reconsideration.
In June, India stunned the e-commerce world with its Consumer Affairs Ministry proposals seeking to limit ‘flash sales’, pushing private label brands and verifying the relationship between online marketplace operators and their vendors. The new rules do not yet have a formal implementation deadline.
A Delhi-based retail executive said, on condition of anonymity, The definition of the respective party certainly needs some more clarity. Otherwise, it will be difficult for foreign players like Amazon and Flipkart.
Still, even domestic companies like Tata and Reliance also sell various brands like Netmeds, Urban Ladder, 1mg, Milk basket, etc., in their application.
Although the rules were announced after brick-and-mortar retailers complained about alleged unfair practices by foreign companies, they also protested the Tata Group while planning an e-commerce expansion with more than $100 billion in revenue.
But the Ministry of Finance, the Ministry of Corporate Affairs and the Federal Think Tank Niti Aayog play a role in policymaking. They objected to the memo reviewed by Reuters, and they said the proposals went far beyond their stated goal of protecting consumers and lacked regulatory transparency.
On August 31, the finance ministry’s economic affairs department said the rules seem excessive and will hit a sector that could boost India’s job creation and tax revenue.
The three-page memo said the proposed amendments could have significant implications/restrictions on the sunrise sector and the ease of doing business. The policy must take care to ensure that the proposed measures contain light-touch regulations.
Vice-chairman of NITI Aayog, Rajiv Kumar, uttered his objections and wrote to Piyush Goyal, Minister of Commerce and Consumer Affairs on July 6, saying that the rules could hit small businesses.
The finance minister took a more rigid stance and raised a total of 12 objections. The U.S. government says New Delhi has changed its e-commerce policies several times in recent years and adopted strict regulatory measures that are hurting American companies in particular.
But Indian consumer affairs minister Goyal disagreed and repeatedly said in tune with brick-and-mortar retailers that the large U.S. companies have violated Indian law and that their practices have harmed small retailers.
It also protests the ban on flash sales, which show deep discounts on offers on websites like Amazon and are popular during the festive season.
