INDUSTRY

Finance Ministry, NITI Aayog oppose some draft e-commerce rules: Reuters

India’s plan to tighten rules on its fast-growing e-commerce market has run into internal government dissent, with the Ministry of Finance describing some proposals as “excessive” and “without economic rationale”, memos reviewed by the Reuters show.


The memos offer a rare glimpse of high-stakes policymaking governing a market already featuring global retail heavyweights from Amazon to Walmart and domestic players, like Reliance Industries and the Tata Group. The sector is forecast by Grant Thornton to be worth $188 billion by 2025.


It is not clear how the objections from the Finance Ministry – a dozen in total – will ultimately be reflected in the proposed rule changes, first floated in June. But watchers of the government’s influential arm say that its complaints will not fall on deaf ears in the upper echelons of Prime Minister Narendra Modi’s administration.


“The Ministry of Finance raising such concerns would likely spur a rethink of the policy,” said Suhaan Mukerji, the managing partner of PLR Chambers, a law firm that specialises in public policy issues.


India in June had shocked the e-commerce world with proposals from its Consumer Affairs Ministry that sought to limit flash sales, rein in a push to promote private-label brands and raise scrutiny of relationships between online marketplace operators and their vendors. There is not yet a formal implementation timeline for the new rules.


Though the rules were announced after complaints from brick-and-mortar retailers about alleged unfair practices of foreign companies, they also drew protest from the Tata Group, with more than $100 billion in revenue, which is planning an e-commerce expansion.


The Finance Ministry, the Ministry of Corporate Affairs and government think-tank NITI Aayog – an active player in policymaking – have all raised objections in memos reviewed by the Reuters, saying that the proposals go far beyond their stated aim of protecting consumers and also lack regulatory clarity.

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