Industry bodies divided over FDI in e-commerce

The Retailers Association of India (RAI), which represents small, independent and large retail businesses in the country, has demanded equal status for e-commerce and brick & mortar retails.

The industry body has now opposed the government’s move to invite stakeholder’s consultation meeting on FDI policy in e-commerce sector saying that retail is a business that should be classified on the basis of category of goods and services provided and not on the basis of channels like brick and mortar stores or e-commerce.

RAI is pushing for a level playing field in respect to FDI among different retail formats, said Kumar Rajagopalan, CEO, Retailers Association of India.
e-commerce

He added, “It is our concern that although the outcome of e-commerce and retail in physical world is the same, the treatment meted out by the Government of India to the two players in the same market is inequitable. Hence, the double standard of the Government in allowing e-commerce with foreign investment in India while not allowing multi brand retail in the physical world is discriminatory.”

The retail body did not participate in today’s stakeholders consultation meeting on FDI policy on e-commerce sector called by DIPP.

Meanwhile the National Association of Software and Services Companies (NASSCOM) participated in the stakeholder meeting chaired by commerce and industry minister Nirmala Sitharaman.

NASSCOM stated that the FDI policy should address diverse needs of entrepreneurs and investors supporting both scaling up of operations and entrepreneurship ideas and therefore the need for 100 percent foreign investments in B2C e-commerce.

The current policy recognizes need for FDI investment in a limited portion of the e-commerce value chain which is the B2B ecommerce. According to NASSCOM, it is imperative that entrepreneurs, who have already made significant investments and are looking ahead to a robust growth and market share, should be allowed to seek investments to support business operations.

The government should work towards creating conditions that motivates ecommerce start-ups and investors, and not bog them down with regulatory conditions and unviable restrictions, NASSCOM said.

With NASSCOM supporting government’s move, RAI will have to now garner industry support to push for their demands.

E-commerce translates the physical world into the internet world and therefore deserves to be similarly regulated as commerce in the physical world, according to RAI.

Due to the advent of technology, the laws which regulate the physical world deserve to be declared archaic and disregarded otherwise it would allow an undue advantage to an e-commerce player at the cost of the physical sector, RAI said.

Rajani Baburajan

[email protected]