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Government sets up panel to look into e-commerce issues
Why in the news ?
- According to an official, with concerns being raised on some proposals of the draft e-commerce policy, the government has set up a group of secretaries to look into the issues.
- The group will be chaired by the secretary in the department of industrial policy and promotion (DIPP).
Details
- The initial draft e-commerce policy has suggested several steps to promote the growth of the fast growing sector.
- It said online retail firms may have to store user data exclusively in India in view of security and privacy concerns.
- The draft stated that any group company of an online retailer or marketplace may not be allowed to directly or indirectly influence the price or sale of products and services on its platform, a move that could completely restrict e-tailers from giving deep discounts.
- The draft has also suggested introduction of a pre-set timeframe for offering differential pricing or deep discounts by e-commerce players to customers.
- Further, the draft recommended permitting 49 per cent foreign direct investment (FDI) in inventory-based business-to-customer e-commerce model.
- Currently, FDI in such businesses is prohibited and it is allowed only in the marketplace model.
- The department of industrial policy and promotion has reportedly ruled out FDI in inventory-based e-commerce.
Concept
- According to WTO, the term 'electronic commerce' is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means.
- E-commerce allows consumers to electronically exchange goods and services with no barriers of time or distance.
- Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate.
- There are two important types of e-commerce model :1. Marketplace based model of e-commerce means providing an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller. Currently 100% FDI is allowed under this model.
- 2. Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. Currently India does not allow FDI under this model
Source
The Hindu.