In a meeting with around 25 e-commerce companies including Amazon, Flipkart, Reliance Jio, Snapdeal and Zomato on Monday, commerce and industry minister Piyush Goyal said the Press Note 2 is clarificatory in nature and the government has not made any changes in the existing law.
“Companies who participated agreed with this. They confirmed unequivocally that the Press Note 2 of 2018 on FDI in e-commerce was only a clarification and did not change the provisions in the FDI policy,” said an official who attended the meeting.
The Department for Promotion of Industry and Internal Trade (DPIIT) had issued a Press Note in December, barring marketplaces from selling products from sellers in which they have an equity interest, and from entering into a deal with any brand to sell any product exclusively on their platform. It also stipulates that the inventory of a vendor will be deemed to be controlled by the marketplace if more than 25% of the vendor’s purchases are from the marketplace entity, including its wholesale unit. The marketplace entity or its group companies cannot have control over inventory under the FDI rules.
Amazon and Walmart-owned Flipkart who were the most impacted by the tighter rules, had sought an extension of the February 1 deadline which the government refused.
The department has earlier clarified that the Press Note 2 was brought out for better enforcement of the policy as enunciated by the Press Note 3 of 2016 which banned FDI in the inventory model of e-commerce and laid down the conditions for e-commerce marketplaces.
Goyal has also said the government will engage with its trade partners on issues of FDI, e-commerce and data on a reciprocal basis.
“The minister has said that India wants to engage with the world in FDI, data and e-commerce but there has to be reciprocity,” the official said.
His statement assumes significance with US Secretary of State Mike Pompeo visiting India in which critical strategic and trade issues such as India’s proposed data localisation norms in the draft e-commerce policy are likely to be discussed.
Pompeo’s visit comes ahead of Prime Minister Narendra Modi’s visit to Japan for the G-20 Summit in Osaka later this week.