An inter-ministerial panel has requested the Telecom Regulatory Authority of India (Trai) to take up the role or suggest if there is a need for a separate regulator for e-commerce. At present, Trai regulates telecommunications, media and broadcasting industries. The need for an e-commerce regulator was felt after the Confederation of All India Traders (CAIT) sought the commerce ministry’s intervention over ‘predatory pricing’ strategies of e-tailers during festival sales last year.
Deep discounts by e-commerce companies have riled brick-and-mortar retailers. CAIT asked the government to set up a taskforce to “probe into the working and business model of e-commerce companies” and to set up a regulatory authority to monitor the business. The inter-ministerial panel will prepare a paper, sought by the Data Security Council of India, on imposing restrictions on the location of servers and on getting companies like Google and Amazon to set up data centres in India. The panel has sought an update from the consumer affairs ministry on measures taken to introduce online dispute resolution in e-commerce. The department of industrial policy and promotion (DIPP) has informed the committee there is no plan to change the foreign direct investment (FDI) policy in e-commerce. The DIPP said there was no lack of clarity in the FDI policy for e-commerce. If required, the DIPP noted, issues related to e-commerce funding and operations could be addressed by formulating guidelines for the sector rather than by modifying the FDI policy. Last month, the DIPP had suggested up to 49 per cent FDI in consumer e-commerce following representations by several US companies. FDI is barred in e-commerce companies selling directly to consumers and there are restrictions on sourcing from local manufacturers. The DIPP also suggested a mechanism to facilitate US investments in India after Amazon, which has invested about $300 million in India, sought the government’s approval for further investments. Foreign e-commerce companies are allowed to operate as online marketplaces. FDI of up to 100 per cent is permitted in business-to-business e-commerce. According to estimates by Google, India’s e-commerce business could grow from $20 billion in 2015 to $70 billion by 2020.