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25% cap on sales to end monopoly of e-commerce majors
04
Apr '16
India's e-commerce sector could be on the verge of a shake-up with the government saying that the 25 per cent limit on single-vendor sales on e-commerce marketplaces having foreign investment is aimed at ending the monopoly of a few big sellers and encouraging more small and medium players to sell their goods online.

According to a Commerce and Industry Ministry official, the condition will now provide huge opportunities to thousands of small and medium vendors to sell their goods online.

The official also said that determining the limit for a single vendor was to ensure that the marketplace is true representation of its nature.

The guidelines on FDI in e-commerce would lead to growth of several ancillary activities involved in the sector such as warehousing and logistics and would strike a balance between e-commerce and brick and mortar stores, he said.

Some e-commerce players, industry experts as well as IT industry body Nasscom are of the view that capping sales from a vendor at 25 per cent of the total sales in the marketplace may prove to be restrictive, more so if the vendor sells high value items.

On March 29, the government had okayed 100 per cent foreign direct investment (FDI) in marketplace e-commerce, where the company only provides platform for buyer and seller to connect.

But the Department of Industrial Policy and Promotion (DIPP)  put a condition that an e-commerce entity will not be permitted more than 25 per cent of the sales through its marketplace from one vendor or their group companies.

E-commerce companies in India plan to make a representation to the government seeking clarity on the norms of doing business. (SH) 

Fibre2Fashion News Desk – India

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