CAIT urges Piyush Goyal to modify Press Note 2 on FDI to curb alleged e-commerce malpractices

New Delhi, Apr 6 (KNN) The Confederation of All India Traders (CAIT) has urged Commerce Minister Piyush Goyal for modification in the provisions of the 2018 Press Note 2 on FDI policy by the Department for Promotion of Industry and Internal Trade (DPIIT) to curb alleged malpractices by e-commerce marketplaces in India.

The traders' body requested Goyal to prohibit direct or indirect equity participation or control over inventory by marketplace entities, to create a level playing field for all stakeholders, and prohibit FDI in inventory-based e-commerce and multi-brand retail in food items. CAIT has also sought a periodic audit of e-commerce companies for compliance checks and also urged for mandatory registration of every e-commerce company with DPIIT.

CAIT National President BC Bhartia and Secretary General Praveen Khandelwal even requested Goyal to extend the scope of the policy on entities in other segments such as travel, air booking, cab services, online food delivery, or any other supply of goods or services through online mode.

“Vide clause 5.2.5.1 100 per cent FDI is allowed in the manufacturing sector under automatic route and is allowed to sell its products manufactured in India through e-commerce. Some foreign e-commerce companies in the inventory model are selling grocery and food in e-commerce under the garb of a selective reading to clause 5.2.5.2 which is a gross violation of the FDI policy both in letter and spirit. Such a back door entry needs to be plugged,” a statement quoted both Bhartia and Khandelwal as saying.

Press Note 2 which was issued in 2018 had clarified that Foreign Direct Investment (FDI) will not be permitted in inventory-led ecommerce models and also mandated that marketplace e-commerce entities file audited reports in compliance with the FDI norms. It also prohibited marketplace e-commerce entities fr0m directly or indirectly influencing the price of goods sold on the platform and sale of exclusive products on the platform by a seller.