Piyush Goyal says no plan to allow FDI in multi-brand retail

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Updated: June 18, 2019 7:06:01 AM

The US had expressed its concern about frequent changes to India’s e-commerce policies and the need for data localisation, which, it felt, were detrimental to the interests of American companies.

E-commerce meet, Piyush Goyal, FDI, multi brand retail, industry news, Amazon, Flipkart, Google, Facebook, Microsoft, American Express, DPIITE-commerce meet: Piyush Goyal says no plan to allow FDI in multy brand retail

In his first key meeting with senior executives of leading e-commerce and IT companies, including Amazon, Flipkart, Google, Facebook, Microsoft and American Express, commerce and industry minister Piyush Goyal on Monday made it clear that the government didn’t have any plan to allow foreign direct investment (FDI) in multi-brand retail at the moment, nor did it wish to permit FDI in the inventory model of e-commerce, sources told FE.

Currently, the government allows up to 100% FDI in the marketplace model of e-commerce and bars e-tailers from owning inventory of goods. Only in the retailing (both online and offline) of locally-produced food products, up to 100% FDI is permitted in the inventory model, that, too, with prior government approval.

In a late-evening meeting with various stakeholders to discuss e-commerce and data localisation policies, chaired by Goyal, several critical issues — such as the impact of “anti-competitive practices” in e-commerce, “predatory pricing and other discriminatory practices” and level-playing field for both domestic and foreign companies — came up for discussion. While FDI policies on e-commerce strictly bar online market places from offering discounts themselves, offline retailers have often accused e-tailers like Amazon and Flipkart of violating this rule through predatory discounts. The e-tailers, however, claim that they have always complied with the FDI rules.

The US had expressed its concern about frequent changes to India’s e-commerce policies and the need for data localisation, which, it felt, were detrimental to the interests of American companies.

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Monday’s meeting also deliberated on other key issues such as, understanding data flows from four aspects (privacy, security, safety and free choice), ownership and sharing of data, gains and costs of cross-border flow of data and means to monitor use of data.

The draft e-commerce policy, circulated recently, bars the sharing of data with third parties, even with the consent of the customer. Some stakeholders have asked the government to relax the data storage rules to allow a company to share data at least with its group companies. This is because, in the absence of a clear-cut definition of the third party, it will mean an Amazon India won’t be able to share data with Amazon Inc for business development or better customer satisfaction. This could potentially limit acquisition and investment opportunities for foreign companies in the Indian start-up space.

Representatives of other companies such as IBM, Dell, SAP, Paypal and VISA also took part in the meeting. The meeting was also attended by minister of state for commerce and industry SomParkash; scretaries of DPIIT, commerce and MeiTY; RBI deputy governor BP Kanungo and senior officials from the ministries of external affairs.

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