Various RR for E-Commerce companies
E-commerce companies are subject to various extant Rules and Regulations (RR). Owing to the cross cutting nature of e-commerce, different laws and regulations across sectors govern the present e-commerce activities, some of which are Income Tax Act, 1961, Consumer Protection Act, 1986, Information Technology Act, 2000, Foreign Exchange Management Act, 2000, Payment and Settlement Systems Act 2007, Companies Act, 2013 and laws related to Goods and Services Tax.
Department for Promotion of Industry and Internal Trade (DPIIT) containing Guidelines for FDI on
E-commerce was issued on 29 March, 2016. However, allegations were made against e-commerce companies that the marketplaces were violating the norms laid down.
So in order to provide further clarity on FDI policy in e-commerce, Press Note 2(2018) (Annexure-I) was issued by DPIIT on 26th December, 2018. Through the Press Note 2(2018), Government has reiterated the policy provisions with more clarity to ensure better implementation of the policy in letter and spirit.
Further, as per clause (ix) of Press Note 2(2018), e-commerce entities providing market place will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner.
Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.
Confederation of All India Traders (CAIT) has represented that large e-commerce platforms are in violation of Press Note 2 of 2018 of the FDI Policy as they are engaging in predatory pricing and are providing excessive discounts. In this regard, responses/clarifications were sought from e-commerce companies concerned on the allegations made by CAIT.
All e-commerce companies, in their responses have maintained that they do not exercise any control over sellers and operate a pure marketplace. Any discount which is offered is offered by the seller/vendor or the respective brand alone.
CAIT has also filed a petition with the Jodhpur Bench of Rajasthan High Court alleging FDI policy violations bye-commerce companies like Flipkart and Amazon which is subjudice.
