Govt declines extension to new e-commerce FDI norms

The Indian government has finally put a full stop on all speculation and demands regarding extension in new FDI rules mentioned in Press note 2.

After a week of suspense, DIPP clarified that there will be no any extension to the new FDI rules, which is slated to be applicable from February 1.

While e-commerce firms such as Amazon and Walmart controlled Flipkart were lobbying to defer the date by at least six months, home-grown players - Snapdeal, ShopClues, and others have been in favour of the government's diktat.

In a press statement, Amazon said that it remained committed to complying with all laws and regulations. However, it will continue to look to engage with the government to seek clarifications that help us decide its future course of action as well as minimize the impact on its customers and sellers.

Meanwhile, VC firms such as IvyCap Ventures, India Quotient, and Ventureast opposed the deadline claiming that this is an unfair predicament as the rules only apply to companies with offshore investments.

Apart from the local e-commerce players, traders and sellers bodies (CAIT and AIOVA) have also supported the government's move. The government was also under pressure by right wing -Rashtriya Swayamsevak Sangh (RSS) who opposed the extension saying that it will hurt the interest of small merchants.

Henceforth, every e-commerce marketplace will have to comply with new rules mention in Press note 2 i.e. maximum sales of 25 per cent from a single seller and no investment in vendors.

Also, it forbids the group company striking exclusive partnership with brands.

The development comes after commerce minister Suresh Prabhu gave assurance for rolling out new e-commerce policy. On Wednesday, the Department of Industrial Policy and Promotion (DIPP) was also renamed as the Department for Promotion of Industry and Internal Trade.

Now, the department will look into matters related to promotion of internal trade, including retail trade, welfare of traders and their employees, facilitating ease of doing business and startups.