Defer implementation of revised FDI norms for e-commerce: IAMAI to govt

The Internet and Mobile Association of India (IAMAI) Tuesday urged the government to defer the implementation of revised norms for e-commerce companies having foreign investments, as few provisions are unclear and onerous.

It said it would not be possible for online retailers to comply with the norm which is related to 25 per cent cap.

According to the revised norms issued by the government last month, inventory of a vendor will be deemed to be controlled by an e-commerce marketplace entity if more than 25 per cent of purchases of such vendor are from a marketplace entity or its group companies.

It is not possible for online marketplaces to track or monitor all sales from any vendor given a vendor is free to sell their products across multiple e-platforms and even offline, it said in a statement.

"Moreover, a bigger concern is when one calculates this benchmark of 25 per cent sales. If platforms realise that this benchmark of 25 per cent has been crossed, they cannot recall or cancel a transaction which has already taken place to rectify the situation," it added.

It said predicting this benchmark is an "almost impossible" task as platforms cannot have a definite measure of future sales from every vendor as it is completely dependent on the buyers' choice.

IAMAI suggested that this provision needs to be re-looked for better drafting.

It also raised objections over a provision that e-commerce players would not mandate any seller to sell any product exclusively on its platform only.

Many small-scale sellers opt to go for exclusive sales through online platforms as these platforms offer warehousing, logistics, and wider market access, it said adding that many new manufacturers prefer digital platforms to avoid high capital expenditures in developing distribution networks and marketing channels.

In view of these issues, IAMAI "requests for deferment of the implementation" of these revised norms and suggested for a consultative process with a wide cross-section of e-commerce companies.

"Few provisions in the Press Note 2 (2018) are unclear and onerous," it added.

Tightening norms for e-commerce firms such as Flipkart and Amazon, the government last month took a host of steps and barred them from selling products of the companies in which they have stake. These norms are issued under this press note.

These steps were taken as the Department of Industrial Policy and Promotion was receiving a lot of complaints that certain marketplace platforms were violating the policy by influencing the price of products and indirectly engaging in the inventory-based model.

These changes will come into effect from February 1.

Further, the association welcomed the guidelines stating that it makes the marketplace model more robust and transparent.