Friday 22 April 2016

Ecommerce in India: HC seeks Centre’s response on RBI’s circular on e-retail, FDI linkage
Delhi High Court today sought the Centre’s response on a petition challenging a circular by the Reserve Bank of India (RBI), as per which retail trading in any form through ecommerce would not be permissible for companies which receive foreign direct investment (FDI).
A bench of Chief Justice G Rohini and Justice Jayant Nath issued notice to the Centre and asked it to file its response within four weeks. The court has fixed the matter for May 24.
During the hearing, the counsel appearing for RBI told the bench, which had earlier sought its reply on the plea, that they would file their response soon.
The public interest litigation has contended that as per the July 1, 2015 master circular of the RBI, while FDI is allowed in business-to-business (B2B) e-commerce, companies that get FDI cannot undertake single and multi-brand retail trading through e-commerce.
It has sought an inquiry into the affairs and transactions of all FDI recipient companies and stop operation of those found to be directly or indirectly carrying out e- commerce in retail sector.
The petitioner also said that “100 per cent FDI is permissible through automatic route for buying and selling by a company through the e-commerce platform but this is subject to the condition that such companies would engage only in B2B e-commerce as against business to consumer (B2C) pattern and not in retail trading”.
The plea had alleged that “in order to mislead and confuse the competent authorities, the said e-commerce companies are creating a conundrum of group websites/companies amongst the closely held/managed sister companies/business concerns and thereby causing tremendous loss to the government exchequer.”
The petition has further claimed that “to circumvent the law, these entities have created a web of connected entities” which carry out different functions, like logistics, handling payments, providing software and technology support and so on.
It had sought that “required legal action be initiated” against the companies or e-commerce sites or entities who have violated provisions of FEMA and the rules framed there under.

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