Government to define ‘marketplace’ in FDI to ease confusion
Ecommerce companies have reason to breathe a sigh of relief. The government is planning toissue a definition of ‘marketplace’in the foreign direct investment policy (FDI). This will hopefully bring an end to the ambiguity relating to the activities of online marketplaces.
In the recent past, physical stores have taken up arms against online commerce by terming their activities to be against the law; particularly the FDI. Their contention has been that thosecompanies receiving investment from foreign companiesare not allowed to sell directly to customers.
Tussles between retailers and etailers
Physical stores have found the footfalls to their premises coming down, and they have pinned the blame on online stores. Late last year, the All India Footwear Manufacturers & Retailers Associationfiled a complaintin the Delhi High Court against online marketplaces alleging FDI violation. The High Court ordered a probe.
Future Group’s Kishore Biyani appears unsure about his feelings towards online commerce.He said on an occasionthat online stores are an unsustainable model and will be shutting down collectively in few months. The next report came out thathe was contemplating on buyingonline home decor store FabFurnish, but thenFuture Group ran an ad campaignthat clearly mocked leading online marketplaces. The ad campaign is a part of Future Group’s apparel store Brand Factory, and pokes fun at leading companiesFlipkart,AmazonandSnapdeal.
Government move can soothe things
The government’s plan to clarify the legal angle will doubtlessly bring relief to online marketplaces. The clarification directs that ecommerce companies ought to be receivingincomes only from‘fees from services provided’, and not from the sale of any goods.
The government is keen on settling things and moving ahead with the online model to encourage entrepreneurs.
Agovernment official said, “Unnecessary confusion drives away businesses.”
Hopefully now the physical stores will leave online stores to their work and work towards healthier means to compete rather than squabble like tots in a playground.