Smaller firms hail India's Press Note 3 on e-commerce FDI

July 17, 2018 - India

E-commerce companies like ShopClues and Snapdeal have welcomed the Indian Government’s decision to reinforce the implementation of Press Note 3 for foreign direct investment (FDI), saying that would facilitate a level-playing field for marketplaces and sellers, and will dissuade malicious practices by certain platforms for some ‘proxy sellers’.

This follows complaints and protests by several companies against e-commerce leaders Flipkart and Amazon for circumventing the norms of Press Note 3, which disallow a seller from selling more than a quarter of the total products on the marketplace, according to a report by a top Indian business daily.

The government is preparing a national policy on e-commerce and is also mulling over setting up a permanent regulator to deal with broader aspects of the industry like FDI implementation, use and purpose of data collection by e-commerce companies and consumer protection.

In 2017, Snapdeal held only a 2.5 per cent market share while ShopClues held 2.1 per cent, compared to 40 per cent held by Flipkart group and 32-33 per cent by Amazon, according to Forrester.

India has until now allowed cent per cent FDI in the marketplace model but not in the inventory-based model. The government’s e-commerce subgroup is reportedly aiming to allow FDI in an inventory-led online retail B2C model.

It further proposed that ecommerce companies should stock products under the Make in India Campaign only under this amendment. (DS)