Chinese telecom major LeEco’s application, seeking exemption from the mandatory local sourcing rule to set up its own stores in India, may have been sent to the Foreign Investment Promotion Board for a decision, a senior government official said on Monday.
Earlier, the ministry of electronics and information technology (MeitY) was examining LeEco’s claim that its products involved “cutting-edge technology” and, therefore, it deserved relaxation from the mandatory 30% local sourcing rule, as stipulated under the foreign direct investment (FDI) rules for single-brand retailing. The proposal was to be sent to the FIPB after MeitY, which is the administrative ministry, sent its inputs.
The government announced in June that entities having “state-of-the-art” and “cutting-edge” technology could get a waiver from the sourcing rule for the initial three years and a “relaxed sourcing regime for another five years” once they set up their own stores in India.
‘E-tailers say they don’t offer discounts themselves’
E-tailers have told the department of industrial policy and promotion (DIPP) that they are not offering any discounts on products sold on their platforms; rather sellers and manufacturers are offering their items at concessional rates, DIPP secretary Ramesh Abhishek said on the sidelines of a conference on Monday.
The reiteration by the DIPP secretary is important as fresh allegations by some off-line retailers suggest the e-tailers continue to offer discounts to take advantage of the government’s demonetisation move on November 8, thus, violating the FDI rules. Even the advertisements of mega sales are given by the sellers and manufacturers of various items, they told the DIPP.
The FDI rules bar any e-commerce player running a market place model from “directly or indirectly” influencing the sale price of goods or services.
In effect, they can’t offer any discounts.