Clarity on FDI in e-commerce sought

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FDI in e-commerce will make India a dumping yard

The Modi Government on Friday held discussion on e-commerce with various industry stakeholders, where e-commerce players raised state specific issues and foreign direct investment, while traditional retailers wanted clarity on definition of retail and also said FDI in e-commerce will make India a dumping yard.

The meeting was chaired by Amitabh Kant, Secretary, Department of Industrial Policy and Promotion (DIPP) and saw participation from e-commerce players Flipkart, Snapdeal, Amazon, IKEA, The Retailers Association of India (RAI), The Confederation of All India Traders (CAIT) and Confederation of Indian Industry, among others.

“E-commerce players raised state specific issues like taxes, value added taxes, and bringing them under ambit of local body taxes,” said Viresh Oberoi, Chairman, CII e-commerce Committee, who was present at the meeting.

In the absence of guidelines, tax disputes have cropped up between leading e-retailers and States such as Karnataka, Tamil Nadu and Maharashtra.

Another hot topic, which was discussed in the meeting was foreign direct investment in e-commerce. At present, 100 per cent FDI is allowed in the business-to-business e-commerce space, which allows global retailers to operate cash-and-carry business in India.

There are no guidelines for operating e-commerce retail business. e-retailers such as Flipkart and Snapdeal are currently operating in the absence of rules, which, traditional brick and mortar stores’ have alleged, has altered the level playing field for them and is thus resulting in a loss of market share for them.

“There was no concrete decision reached on the issue of FDI in e-commerce,” said Mr. Oberoi.

Meanwhile, CAIT and RAI have raised some strong issues against the e-commerce players in the meeting.

In a statement, CAIT said that its Secretary General Praveen Khandelwal urged upon the Government not to make Indian retail market as e-commerce dumping yard by allowing FDI in e-commerce. Indian retail trade is not merely a form of business, but it is a source of livelihood of tens of millions people in the Country, he added.

Mr. Khandelwal also said that though 100 per cent FDI is allowed in business-to-business model, the e-retailers are openly circumventing the norms and indulging in business to consumer model which is creating an uneven level playing.

“While we agree that e-commerce is here to stay, we want to understand what the definition of retail itself is. All this e-commerce players want to be termed as IT/ITES players and offer retail services which is a major concern for us. Major clarity should come on this aspect,” RAI chief executive Kumar Rajagopal said.

The Commerce Ministry will hold discussion with states on e-commerce in July.

Keywords: FDI in e-commerce, Department of Industrial Policy and Promotion, Commerce Ministry

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