Government to set up panel to review ecommerce rules, FDI

The government has decided to set up a committee to look into all issues including foreign direct investment (FDI) norms pertaining to the fast growing e-commerce industry in the country, the committee would also suggest ways to further promote the growth of the sector. The committee will look into problems like taxation, facing by some of the e-commerce firms. There are also issues related to ecommerce players selling pharmaceuticals.

The committee will be headed by the NITI Aayog CEO; other members in the panel include officials from commerce and industry ministry and department of electronics and IT. Representatives from four states including Maharashtra and Karnataka are also members of the panel. Setting up of this panel also assumes significance as the government has recently permitted 100 per cent FDI in food processing sector. The Department of Industrial Policy and Promotion (DIPP) has allowed 100% FDI through automatic route in the marketplace format of e-commerce retailing in March.

According to new FDI rules introduced in March this year, DIPP had classified the marketplace model as a B2B activity in which 100 per cent FDI was allowed. But this also meant that a marketplace could not directly or indirectly influence the sales price of goods or services or offer discounts and no vendor should account for more than a fourth of total sales.