Govt. to clarify e-com FDI rules

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Platforms can only act as service provider, not be part of the trade, warns Goyal

The Centre plans to issue a clarification on the foreign direct investment (FDI) policy for the e-commerce sector in the wake of investigations into some foreign players’ operations following complaints about malpractices, according to Commerce and Industry Minister Piyush Goyal.

The government had sought information from the online marketplaces as part of a probe into ‘certain complaints from consumers and small retailers about certain practices of e-commerce companies’, Mr. Goyal said on Tuesday. Stressing that e-commerce platforms could only act as a service provider, the minister warned players ‘who break the law’ that they would have to correct their business practices at the earliest.

‘Agnostic platform’

“We are also considering certain clarifications to ensure that the e-commerce sector works in the true spirit of the law, of the rules that have been laid down,” he said, adding the caveat that the e-commerce policy per se would, however, not be changed as it was ‘robust, well-designed and operating in India in several sectors’.

“To reiterate, e-commerce is supposed to provide an agnostic platform so that buyers and sellers can trade with each other, the platform should not become a part of the trading transaction, neither should it be funding it or having algorithms that give preference to one or the other… They should neither be promoting their own products, but provide all data required to make a rational choice and the choice should be the free choice of the consumers,” Mr. Goyal explained.

“We believe that buyers and sellers should be given an opportunity to trade with each other; the platform is only a service provider,” the minister said. “And those who break that law will certainly have to respond to our concerns and correct their business practices at the earliest,” he added.

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