The Confederation of All India Traders (CAIT) published a white paper on e-commerce policy, saying that e-commerce entities have “structured their marketplace relationship with merchants in such a way that they are able to display both merchants on their platform.” or the inventory and also escape the control of the enforcement authorities.”

India’s largest trade association, CAIT, said on Tuesday that few multinational e-commerce giants with a heavy arsenal of financing are trying to ignore foreign investment guidelines for the sector and demand strict enforcement measures.

The Confederation of All India Traders (CAIT) published a white paper on e-commerce policy, saying that e-commerce entities have “structured their marketplace relationship with merchants in such a way that they are able to display both merchants on their platform.” or the inventory and also escape the control of the enforcement authorities.”

“Under the guise of such control or ownership over sellers, the problem also permeates from a mere violation of FDI policy to anti-competitive behavior,” it said. “The mitigating measures and strict action to enforce the law in letter and spirit are of paramount importance.”

Otherwise, FDI’s e-commerce policy will fail in its objective of meeting the interests of domestic manufacturers, traders, sellers, SMEs, start-ups and creating a level playing field in retail, it added.

CAIT said government policy allows 100 percent foreign direct investment (FDI) in single-brand retail trading (SBRT) and B2B cash and carry. However, in the case of multi-brand retail trading (MBRT), FDI up to 51 percent is only allowed through the government approval route with a host of conditions to protect the activities of SMEs and small traders.

Since inventory-based e-commerce is nothing more than operating a multi-brand store through electronic means, in the case of such a model of e-commerce under the FDI policy, no foreign direct investment is allowed.

To enable the spread of technology that can help MSME and kiranas, 100 percent FDI through the automatic route is allowed to set up the ecommerce marketplace platform. This is with the caveat that an entity operating such a technology platform will not own/control a seller’s inventory on the platform, as this amounts to operating multi-brand retail trade.

“The above terms are strict and clear in their intent to prohibit the entities with FDI from conducting any form of electronic version of MBRT i.e. inventory based e-commerce. “However, few multinational e-commerce entities with a large arsenal of financing, operating in India under the guise of its complex corporate structure, have attempted to ignore the above FDI terms,” it added.


This post MNC e-commerce giants breach FDI standards: CAIT was original published at “https://www.financialexpress.com/industry/mnc-e-commerce-giants-violating-fdi-norms-cait/2461536/”

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