Chennai: India’s e-commerce sector may well face more changes in the coming weeks as the Department for Promotion of Industry and Internal Trade (DPIIT) continues on its quest to make the new regulatory framework suit the industry according to the nation’s needs.
Reports have stated that the department, formerly known as the Department of Industrial Policy and Promotion (DIPP) is looking to excuse itself from setting up a sector regulator. It will however continue to include the recently updated changes in FDI policy, reports have stated.
On the other hand, the government (reportedly) has set up a small working group constituting both angel investors and startup founders, to look into the issues faced by angel investors. It has been stated that the government could likely come up with a fresh notification on angel tax in a week.
Announced on 26 December, 2018, under Press Note 2, the new regulations will bar online marketplaces, that are backed by foreign investments, from selling products of the companies where they hold stakes in, as well as ban exclusive marketing arrangements.
Change never changes
On Monday (4 February), Minister of State for Commerce and Industry, C R Chaudhary, filed a written reply to the query on changes in FDI for e-commerce and its impact saying, “The FDI policy on e-commerce has remained unchanged. Better enforcement of this policy will contribute significantly to the growth of this sector over the medium and long term.”
In a Lok Sabha reply, Chaudhary also highlighted that a think tank on ‘Framework for National Policy on ecommerce’ was constituted by the Department of Commerce and a task force under the think tank was set up for preparing recommendations for India’s National Policy on the sector.
“Department of Commerce formulated a draft policy document titled ‘Electronic Commerce in India: Stakeholder Recommendations Received for a National Policy Framework’ after consulting various stakeholders including concerned Ministries/ Departments, State Governments, apex industry chambers, associations and other organisations, taking into consideration their views/comments. The views and suggestions of various stakeholders were considered while drafting the above policy document,” he said.
Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu, later set up a new interdisciplinary panel to look into the feedback and comments made by e-commerce stakeholders on the draft. The old draft e-commerce policy had also called for the sector regulator.
The draft ecommerce policy was made public in August by the Ministry. However, the policy draft faced resistance from many departments and Ministries, which felt that the recommendations exceeded the Commerce Department’s brief.
In 7 days….
On the same day, the DPIIT and Central Board of Direct Taxation (CBDT) met with investors and startups. The meet was headed by DPIIT Secretary, Ramesh Abhishek.
The meet was the outcome of incessant protests by investors in the last few weeks following the government’s notification on angel tax on 16 January.
“Have received many suggestions on angel tax issues; small working groups will be formed to suggest changes,” said Ramesh Abhishek.
“CBDT and DIPP have committed to coming up with a fresh notification to provide relief on angel tax within a week’s time and some of us will be working with them during this period. The objective is to devise a mechanism through which startups can be differentiated from shell companies and get a blanket relief from angel tax,” said Sachin Taparia, who is a member of the newly formed committee, reported a media outlet.
|$50 bn wiped out|
|Within a few days after the revised FDI rules came into effect, leading online retail marketplaces Amazon and Flipkart’s parent Walmart together saw $50 billion getting wiped off from their market capitalisation, reports stated.
The government’s move has allegedly jeopardizing ambitious growth plans of large e-tailers like Amazon and Flipkart and consequently, Amazon shares tumbled on the Nasdaq by 5.38 per cent to $1,626.23 per piece on Friday while NYSE-listed Walmart’s stock price ended 2.06 per cent lower at $93.86.
The reported market cap loss for Amazon is more than $45 billion while for Walmart it is more than $5 billion.