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India’s Initiatives to Drive E-Commerce

India Initiatives to Drive E-Commerce

According to a recent press release by the Ministry of Commerce and Industry, India has created several laws and regulations to govern present e-commerce activities. Some of these include the Income Tax Act, 1961; Consumer Protection Act, 1986; Information Technology Act, 2000; Foreign Exchange Management Act, 2000; Payment and Settlement Systems Act, 2007; Companies Act, 2013; and laws related to goods and services tax.

The Department for Promotion of Industry and Internal Trade (DPIIT) through Press Note 3 of 2016 issued the guidelines for FDI on e-commerce.

However, allegations were made against e-commerce companies that marketplaces were violating the norms laid down in Press Note 3. Therefore, to provide further clarity on FDI policy in e-commerce, Press Note 2 of 2018 was issued by DPIIT in December last year.

In this press note, the government reiterated the policy provisions with more clarity to ensure better implementation. Further, as per clause (ix) of Press Note 2 (2018), e-commerce entities providing a marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.

Services should be provided by an e-commerce marketplace entity, where it has direct or indirect equity participation or common control to vendors on the platform in a fair and non-discriminatory manner. These services include but are not limited to fulfilment, logistics, warehousing, advertisement/marketing, payments, and financing.

The Confederation of All India Traders  (CAIT) has represented that large e-commerce platforms were in violation of Press Note 2 of 2018. They were engaging in predatory pricing and providing excessive discounts. In this regard, responses/clarifications were sought from e-commerce companies concerned with the allegations made by CAIT. All e-commerce companies, in their responses, have maintained that they do not exercise any control over sellers and operate a pure marketplace.

A draft e-commerce policy was prepared and put up in the public domain on 23 February 2019 for comments and suggestions. Comments from over 120 stakeholders (companies, industry associations, think tanks, and foreign governments) have been received.

To improve mutual coordination between e-commerce companies and retailers, stakeholder consultations are being held by the government.

In a recent report by the United Nations, India ranked 73rd out of 152 countries in a business-to-consumer e-commerce index, moving seven places up the list. The index measures the country’s economic preparedness to support online shopping. They are scored on the access to secure internet servers, the reliability of postal services and infrastructure, and the portion of their population that uses the internet and has an account with a financial institution or mobile-money-service provider.

India ranked 80th in 2018 and 83rd in 2017. In India, internet shoppers as a share of Internet users was 11% and internet shoppers as a share of the population was 3% in 2017. The Netherlands topped the list for the second consecutive year.

The 10 developing countries with the highest scores are all from Asia and classified as high-income or upper-middle-income economies. The least developed countries occupy 18 of the 20 bottom positions.


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