The Department of Industrial Policy
and Promotion, Government of India (DIPP), has issued the consolidated FDI
Policy 2016 (FDI Policy) on Jun 7, 2016. The new consolidated FDI Policy is
much more convenient and clear to understand in its form and substance. The
policy and procedures are clear and well defined.
As
regard companies engaged in E-commerce business, FDI up to 100% is permitted
under automatic route. The FDI Policy also includes online marketplaces within
the category of e-commerce. A Marketplace based model of e-commerce means
providing of an information technology platform by an e-commerce entity on a
digital & electronic network to act as a facilitator between buyer and seller.
To safeguard the interests of small
traders who would want to sell their products through these e-commerce/ online
marketplace entities, the FDI Policy provides that an e-commerce/ online marketplace
company having FDI should not permit more than 25% of the sales affected
through its marketplace from one vendor or their group companies. But the FDI Policy
has been silent on the on the mechanism for monitoring the e-commerce/online marketplace
companies to ensure compliance of the 25% requirement. There is no requirement for
reporting of details like total sales effected through their marketplace,
details of sales effected through each vendor listed on this marketplace,
ownership structure of the vendors registered on their market place etc. to any
government authority to ensure compliance of this requirement.
Singhania
& Partners
http://bit.ly/2aLlQms
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