Source: ETRetail.com, Mar 26, 2021
Leading e-commerce companies were split on the issue of the government’s Foreign Direct Investment (FDI) policy for the sector at a meeting with officials of the Department for Promotion of Industry and Internal Trade (DPIIT) on Thursday.
US-based e-tailer Amazon and Walmart-owned homegrown e-commerce company Flipkart sought policy certainty for a stable investment climate amid the ongoing Covid-19 pandemic.
On the other hand, Tata Cliq and Reliance Retail pushed for a wider definition of group companies to prevent misuse and strict checks on violations of Press Note 2 regulations, along with penalties, multiple people who attended the meeting said.
The department has asked for written submissions from the companies in the next one week, they added.
An Amazon spokesperson told ET that the “FDI policy needs to be stable and predictable for investor confidence as any disruption in business will impact millions of livelihoods and jobs, have negative consequences on downstream suppliers and service providers including MSMEs, startups and offline stores which have barely recovered from the setback of Covid-19.”
Flipkart’s representative said at the meeting that frequent policy changes were disruptive and would spoil the country’s image and sought that the government refrain from changing any laws and for light-touch regulation to realise the full potential of the e-commerce sector.
There are already enough enforcement mechanisms to tackle violations in FDI laws and investments by domestic players were a positive for the sector, the Flipkart representative is learnt to have said at the meeting.
The virtual meeting, chaired by DPIIT secretary Guruprasad Mohapatra, was attended by representatives of about 25 e-commerce companies, including Amazon, Flipkart, Snapdeal, Reliance Retail, Jio Platforms, 1mg, Tata Cliq, Swiggy, Shopclues, Info Edge, Paytm, Grofers, Ola and Uber.
Some companies also raised issues such as capital dumping and manufacturing of own brands but sale via third parties by e-commerce players.
Tata Cliq’s submissions at the meeting were around ensuring a level playing field by curbing deep discounting, transparency through audits and disallowing marketplaces from owning inventory, said Gurvinderjit Samra, chief business officer.
“What is needed is for the government to do something on the ground (to address violations). It could be in the form of penalties or anything else,” Samra said. “Marketplaces should not be discounting from their side, which we see continuing to happen from time to time during large events”.
Reliance Retail, sources said, submitted that FDI laws were being violated and made a case for changing the definition of related parties.
Flipkart, Snapdeal and Reliance Industries did not respond to requests for comment till press time Thursday.