Ecommerce policy to outline business category of Flipkart and Snapdeal

Last week Flipkart won a landmark VAT tax case in Kerala, after pleading that it is like an escrow agent, that only facilitates the process between buyer and seller.

This would not have gone down too nicely with offline stores who are currently in limbo and baffled if they are actually winning the war against deep pocketed marketplaces who are discounting products at throw away prices. “Its just not fair” we can hear them shout!

“Today, there is no definition. Brick-and-mortar units are suffering and ecommerce is growing. Everyone will start buying from the comfort of the mobile phones and you can’t stop this. We want an ecommerce policy that can generate employment in a stable environment. Then is the issue of portals. Where do you set up these portals? Should there be foreign investment in them and if yes, then how much,” a commerce department official said.

Who and what the heck are they?

Now for the first time whether we refer to the likes of Snapdeal and Amazon as marketplaces, portals, or platforms will be clearly defined in a policy soon to be drafted by the nodal electronics and IT department.

  • It will contain the definition of ecommerce units
  • Set classifications for size, scale and set workforce norms
  • Rules to do business outside the country

Policy guidelines

Creating a policy for the rapidly expanding ecommerce industry in India is not as easy as it looks and the government currently has six departments working on it. Once constructed it is felt the policy will provide sufficient incentives for companies to conduct business.

“The policy will mention what is an ecommerce unit and what all services they offer. Such definitions help the government offer better incentives to the sector by giving some kind of a revenue cap,” said an official from industry body Nasscom. “

FDI change of heart?

Currently foreign direct investment in business-to-consumer ecommerce is not allowed, which has led to allegations that foreign investment regulations are being flouted by ecommerce marketplaces. On the flip-side, pressure is intensifying from foreign trading partners to clearly outline a policy with no red tape so to speak. According to reports, the answer may be that the government plans to launch an ecommerce best practice policy, in order to allow for the smooth flow of joining the Regional Comprehensive Economic Partnership.

As there are strong sentiments from both offline and online stakeholders, we will just have to wait and see how this one plays out. The good news is that once the policy is set, everyone finally will know where they stand. Whats your view?

In The News
Share OnShare on FacebookShare on Google+Tweet about this on Twitter

Leave a Reply