Panel: Fast-track probe against e-comm cos flouting FDI rules

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NEW DELHI: Flagging the limitations of the FDI policy in addressing anti-competitive practices in the e-marketplace such as self-preferencing, lack of platform neutrality, deep discounting, exclusive agreements and preferential treatment to selected sellers, a parliamentary panel has recommended that the government should have a holistic framework to address these issues. It said this should apply to all marketplaces being funded by foreign or domestic entities.
The standing committee on commerce has also recommended that the enforcement mechanisms under the FDI policy are effectively strengthened and actions are taken against e-commerce giants that are found flouting the FDI rules. “A timebound investigation mechanism is required to address the fast-paced digital market and ensure that unfair market practices do not occur due to sluggish investigation process,” the panel said. According to the report on the “Overview of E-commerce Market” submitted to the Rajya Sabha Secretariat on Wednesday, the panel has observed that blanket imposition of increased obliga- tion on e-commerce companies, irrespective of their size as per the e-commerce rules notified by the consumer affairs ministry, may be counterproductive and may decelerate the growth of e-commerce in India.
It has recommended that a calibrated approach be adopted towards regulating e-commerce entities and the additional duties and liabilities sought to be introduced through the Draft Rules sho- uld be made applicable specifically to only e-commerce entities that qualify a certain threshold, particularly to regulate e-commerce giants. The consumer affairs ministry is yet to notify the fresh amendments to e-commerce rules amid reservations from different ministries.
The committee, in its report, said that the e-commerce companies are not registered with the DPIIT (internal trade department) despite it being the parent department to deal with the sector. It said mandatory registration of ecommerce companies with the department will be the first step towards streamlining the regulation of the sector and will also assist in gauging the progress of the sector. The panel has said that frequent changes to policy are against the ethos of ease of doing business as it brings uncertainty in the policy regime while recommending a stable FDI policy regime for the sector to boost the confidence of potential investors.

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