E-commerce majors Amazon and Walmart are pushing hard to secure an extension of the government's February 1 deadline for the new Foreign Direct Investment guidelines, but domestic traders have threatened a nationwide campaign if this does take place.
While the Department of Industrial Policy and Promotion (DIPP) is not in favour of an extension, officials said a final call on the matter is yet to be taken.
Senior officials are currently in Davos, Switzerland, to participate in the World Economic Forum. A meeting on the matter will be held only after they come back.
"Any extension/ deferment/amendment or change in FDI policy in e-commerce at this stage will be conceived as a weakness of the Govt which will also have political fallout," Praveen Khandelwal, Secretary General of the Confederation of All India Traders (CAIT) bluntly said.
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Khandelwal added that CAIT will also launch a nationwide campaign against any such move. The CAIT has also demanded that the DIPP should immediately convene a meeting of stakeholders and make the stand clear to end the confusion and bring an end to pressure tactics of global e-commerce players and their mentors at the US.
Major e-commerce players have seen the red over restrictions on private labels and flash sales.
An aggressive push by e-commerce majors over the New Year weekend to force the government into a parley seems to have paid off, with the latter clarifying there are no restrictions on private labels being sold by e-marketplaces.
The sharp reversal of policy by DIPP had come barely a week after the government had explicitly restricted such sales and is the latest development in an intense ongoing debate on e-commerce rules.
An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity and DIPP's press note 2 (2018) had said initially.
This had the effect of bringing together the two largest e-marketplaces, Amazon India and Flipkart. These two companies currently have 30 private labels covering 200 different categories. They have together spent $1.5 billion in the country to expand their private labels, and have major expansion plans. A senior functionary from one of these majors argued that they were staring at huge losses as significant capital has already been spent on infrastructure, staff, and marketing.