The government is considering a change in foreign direct investment (FDI) rules in the e-commerce sector, under which such companies with FDI in the sector are prohibited from purchasing products from vendors they own or have. The parent company has an indirect stake. Sources gave this information.
In December 2018, the government prevented companies from offering a platform for online sales of products for companies to sell direct-stake companies. Under current policy, companies that provide an online sales platform have 100 percent FDI but are prohibited from carrying out activities such as selling finished goods in warehouses. It is important for the government to consider the changes in regulations in respect of FDI-enabled e-commerce companies. This is because the country’s trade association, the Confederation of All India Traders (CAT), has consistently accused e-commerce companies of violating FEMA and FDI rules. According to the CAT, the Ministry of Commerce and Industry has sent a memorandum to the Enforcement Directorate and the Reserve Bank on allegations of violating Amazon and Flipkart rules for necessary action.
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