Indian government's 100-day plan may include new e-commerce policy
The Indian government's upcoming 100-day plan could feature the much-awaited e-commerce policy, as per Moneycontrol. This policy aims to resolve contentious issues like additional taxes on e-commerce companies, data ownership, product prioritization in search results, and sale of private label brands. "Much of the e-commerce policy has already been ironed out at the official level. With political backing, it could be part of the government's 100-day plan," a high-ranking government official revealed.
Policy in development since 2016
The e-commerce policy has been under development since 2016, with stakeholder talks taking place at all levels. Its finalization, however, has been delayed due to conflicting interests between small businesses and big e-commerce platforms. Small and medium-sized enterprises (SMEs) have advocated for stringent rules governing e-commerce operations, including restrictions on selling private-label products and sharing customer data. Conversely, online marketplaces have lobbied for a more lenient approach.
Anticipated provisions of the e-commerce policy
"The e-commerce policy, potentially part of the government's 100-day plan, is expected to clarify whether additional taxation is necessary for e-commerce players if a product is purchased beyond a certain limit," stated the official. The policy will determine if purchases exceeding a certain limit on e-commerce platforms will attract extra taxation. Furthermore, it aims to establish rules regarding advertising-based search results on these platforms, providing clarity and structure in this rapidly growing sector.
E-commerce policy to address search result prioritization
The official further elaborated on the issue of product prioritization in search results. Customers typically choose items that appear in top searches, which often include brand advertising on their platform. "The search can also be skewed based on ownership or items stored in the warehouse of the e-commerce platform," the official added. E-commerce platforms charge sellers a fee for storing products in their warehouses to ensure prompt delivery times, a practice that will be scrutinized under the new policy.
Policy to safeguard small businesses from private labels
While US allows online sellers to retail their private-label brands, Indian policymakers are under pressure to take a stringent approach to protect small businesses. In India, SMEs make up over 80-85% of businesses, and allowing e-commerce platforms to retail private labels, could potentially harm these smaller competitors. "E-commerce companies should not be allowed to have direct ownership in businesses. They often try to circumvent the current policy through ownership by related parties. It's a complex system," another government official claimed.
