DIPP issues guidelines for ecommerce firms for selling products

New Delhi, Dec 27 (KNN) The Department of Industrial Policy and Promotion (DIPP) has issued a set of guidelines for ecommerce firms like Amazon and Flipkart for selling products.

In a review of the Foreign Direct Investment (FDI) policy in e-commerce, DIPP said “FDI is not permitted in inventory based model of e-commerce, which means that e-commerce players are barred from selling products on their platforms from sellers in which they inventory of goods and services is owned by e-commerce entity.

The commerce ministry arm, DIPP further clarified that the 100% FDI under automatic route is permitted in marketplace model of e-commerce.

Apart from this, to maintain level playing field in the ecommerce sector, DIPP in the press note clarified that the e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field.

It said “Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc.”

Also, cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory, said DIPP.

The DIPP has strictly prohibited the e-commerce marketplace entity for mandating any seller to sell any product exclusively on its platform only.

An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller, said DIPP.

In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India and any warrantee/ guarantee of goods and services sold will be responsibility of the seller.

The above decision will come into effect from 01 February, 2019 and e-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.