Electronic commerce (e-commerce) is emerging as a crucial catalyst for Indian economic growth and development. Recognising its potential, the government is closely monitoring the evolving electronic business landscape, which requires a regulatory framework to protect buying, selling, marketing, and distribution activities. With the expectation of a reliable e-commerce policy being introduced by the government, the recent discussions surrounding the new e-commerce policy draft have become the centre of attention. BW Business World aims to explain the upcoming e-commerce policy draft in detail.
Government Plans to Introduce Updated E-commerce Policy
While there is no official announcement regarding the release date, media reports confirm that the government is currently working on revised versions of the e-commerce policy that will provide comprehensive guidelines for all online transactions. This includes digital commerce and service providers, marketplaces, ride-hailing companies, ticket booking platforms, and payment companies.
The revision draft is also expected to address updates to e-commerce rules to align with the e-business policy, reducing the scope for any misunderstandings.
Objectives of the New Policy
The new policy and rules aim to prevent direct or indirect sales of products to sellers registered on e-commerce platforms. Additionally, the policy will focus on displaying catalogues and search results in a fair and transparent manner for consumers.
Expectations Regarding Foreign Direct Investment (FDI)
Although India currently allows 100 per cent foreign direct investment (FDI) in the marketplace model of e-commerce, where companies act as technology platforms connecting buyers and sellers, there are certain limitations. These limitations include a restriction on a foreign entity to permit no more than 25 per cent of its total sales on the marketplace from one vendor or group entities. Furthermore, the foreign entity cannot directly or indirectly influence the sale price. The report suggests that FDI is anticipating revisions to address these limitations. Additionally, there is a need for a revision in the sourcing of sellers’ inventory that requires more than 25 per cent on the digital business platform.
Key Highlight
The e-commerce policy is almost finalised and will be made public soon. It is expected that both Amazon and Indian marketplaces will adhere to the same rules under the revised policy, as per reports.
