New panel to review rules for e-comm, including FDI in India

The government of India has set up a committee to look at easing the policy regime for e-commerce players, including the rules for foreign direct investment, a controversial issue with local retailers who fear an adverse fallout of the entry of global players.

“The terms of reference of the committee would be to examine various issues in e-commerce sector and making recommendations for further liberalisation of the policy,” an office memorandum reviewed by TOI said.

Sources said the Prime Minister’s Office has set up a panel headed by NITI Aayog chief executive Amitabh Kant with representatives from other ministries as well as states such as Karnataka, Maharashtra and Punjab. The panel has been asked to submit a report within 60 days. “There are a lot of tax issues and other concerns for the sector, including those related to GST, which will be addressed by the committee,” said a source.

Allowing foreign players in the retail arena has been a contentious issue for long in view of a vocal traders’ lobby opposing the entry of large companies. The powerful lobby has argued that global players with deep pockets would wipe out mom-and-pop kirana shops, rendering thousands jobless. This group has also found support from some large domestic players, who have sought to block the entry of global rivals. While multi-brand retail has been resisted by local players, global giants such as Amazon have entered India through the ‘marketplace’ model, where they provide a platform for Indian retailers to sell their products. Until a few months ago, even this segment was unregulated and only recently the department of industrial policy and promotion issued guidelines for foreign investors.

Although the ruling major party – BJP had blocked multi-brand retail when the UPA allowed FDI, since coming to power two years ago, the Narendra Modi government has opened several windows for overseas players to enter the Indian market. For instance, it created a special dispensation for companies such as Apple to open their own retail outlets. Similarly, 100% FDI has been allowed in food retail, provided locally-produced or manufactured products are sold in these stores.(TimesOfIndia News)