New Delhi: After intense pressure from the retail lobby, the Central government is planning to issue guidelines for the country’s fastest growing e-commerce sector. Currently, there are no guidelines for the sunrise industry, which is eating into the market of brick-and-mortar retailers. According to a top Department of Industrial Policy and Promotion (DIPP) joint secretary Atul Chaturvedi, the government is aware of the issues between e-commerce retailers and brick-and-mortar outlets and it would “shortly address” this by evolving guidelines through FDI policy.
He, however, said that the government is unlikely to regulate the e-commerce entities since clear cut policy on this front is in place but will evolve guidelines to strike a balance between the two. Recently, Retailers Ass-ociation of India (RAI), which represents brick-and-mortar retailers including Future Group, Reliance Retail, Shoppers Stop, dragged the Centre to Delhi High Court alleging that e-commerce firms have attracted FDI through the “so-called marketplace model”, which is a misnomer for actual retailing.
It alleged that marketplaces do more than just facilitate sales and the online retailers not only hold inventories on behalf of the sellers but also ship them to the buyers.Last week, the Delhi High Court asked the government to consider the plea of the Retailers Association of India for parity in foreign direct investment (FDI) norms between e-tailers and retailers.According to reports, the High Court had asked the Union government to consider RAI’s plea and revert with a decision within four months.
At present, 100 per cent foreign direct investment is allowed only in business-to-business (B2B) e-commerce and not in the retail segment.Traders body, Confederation of All India Traders (CIAT) had called for a probe in the business model and trade practices of e-commerce companies to find out how they are offering huge discounts.Recently, commerce and industry minister Nirm-ala Sitharaman had convened a meeting of representatives from both online and offline retail segments to seek their views for formulating an appropriate policy.
In principle, the BJP is opposed to foreign direct investment in multibrand retail due to the concerns of small retailers.The mom-and-pop shops in the country fear losing their business to foreign retailers, if they are allowed in the country.However, the government appears to be going soft on its opposition to FDI in multibrand retail, with finance minister Arun Jaitley talking abo-ut continuing the UPA’s policy on FDI in multibrand retail.The UPA government had allowed states to take a call on permitting foreign direct investment in multibrand retail. Follow-ing which some Congress-ruled states decided to allow FDI in multibrand retail, while BJP states opposed.
