Tuesday 22 January 2019

We are not telling e-comm players how to do business, but biz model should conform to policies: Suresh Prabhu

We will assure all the foreign investors and domestic investors that we will have a stable and transparent policy,
Suresh Prabhu, Commerce Minister tells Supriya Shrinate of ET Now in an exclusive interview. We are not telling e-comm players how to do business, but biz model should conform to policies: Suresh Prabhu
Edited excerpts: 

There seems to be a lot of confusion about retail FDI policy. Would you like to explain about it?
Firstly, I do not think there should be any confusion at all. The foreign direct investment policy is very clear. The political philosophy behind it is also very clear. It was decided that single brand retail will be allowed. Multibrand retail further will not be allowed. How do you define single brand retail was an issue. It was already clarified whether an inventory-based model or non-inventory based model. All those issues are there. That is one part. There is absolutely no confusion.

The second part is while foreign direct investment comes into the country, we can never forget the ethos in which it comes and operates. In India, there are millions and millions of retailers who have some issues. It is not that there is any conflict between the domestic interest and foreign direct investment. We are very clear that policy should govern the foreign direct investment. We are trying to make it as simple as possible, as transparent as possible, as participatory as possible and we are saying that whoever wants to come in, is most welcome and will be guided by a staple policy framework. 

Now, in case there are any issues, that can always be dealt with. The secretary DIPP has been in touch with all those who are having any issues. We will be definitely be looking to that.

If the restriction was on FDI in e-commerce, I do not think anybody would have a problem. But the restriction is largely on market place models that are foreign-owned. These restrictions do not pertain to domestic models. People are wondering if you are looking to create a monopoly, Domestic models can offer steep discounts. They can get into exclusive partnerships. They can sell private labels and all of that. Why this non-level playing field as people say this favours Reliance Industries, big Indian retail, vis-à-vis foreign owned companies!
We are coming out with an e-commerce policy per se. The e-commerce policy was actually started by the commerce department. Now, it is with the DIPP which is looking into it. A huge number of people have been consulted and if you recall this is the first time the policy was framed taking in the views of all the stakeholders. When the e-commerce policy comes in, we will deal with the point that you are talking about, the domestic versus foreign issues will be dealt with.

So you believe there is scope for dealing with this particular issue?
That part will be dealt with there. As far as FDI is concerned, try to understand that FDI comes in from outside. Those who are operating domestically, are operating here anyway and there is no policy required for that. 

E-commerce policy is a subject specific policy whereas FDI is a policy which is related to foreign direct investment related to a particular sector. Therefore in dealing with that, a single brand retail model was thought of. When you talk about single brand model, how does single brand operates at a market place has to be defined. Otherwise, how can you say that single brand retailers are allowed but how they will operate in the market place will not be decided?

Therefore this clarification will come after secretary commerce, DIPP, meets all the stakeholders. He has been in touch with them and find out what is the issue. 

I appreciate that you are saying that the specific point about a non-level playing field will be dealt with in the e-commerce policy. The reason why I asked that question is that whether it concerns getting into exclusive partnerships, sale of private labels, deep discounts, you are obviously trying to protect the small Indian shopkeepers. But are you also not at the same time telling e-commerce companies how to do their businesses? that is one criticism.
It is absolutely up to them to decide on their business model.

But this is a part of their business model.
I know but now the business model should confirm to certain policies. When we are talking about a single brand, I can say I have a multi-brand business model. So now single brand business model has to be further articulated.

As I said if they have any issues, they can come and talk to the secretary DIPP. We will find out what their real issues are. But let me make it very clear. We are not interfering in how they should do business. It is not my business to decide how they should do their business. Our issue is very clear that as a implementer of the frame policy of FDI, we should find out whether the clarification was needed. There were a lot of representations.

A clarification is always good. You try and end the grey zone. You try and make it black and white. A clarification is always welcome. It is good. I will insist upon asking that question and I may word it a little differently. When you say no exclusive deals, why not allow exclusive deals, why should people not have the choice to exclusively sell at certain platforms, are you not denying the consumers the opportunity of deep discounts as well and which is why I said why get into business practices like these.
See firstly as you correctly pointed out in the beginning itself there are tradeoffs between foreign investment and the (1:36) in which they operate domestically. Second is the consumer interest as well as those who are in that business their interest. So the tradeoffs have to be properly worked out. Now this particular one as I said let them come and talk to the ministry. Let us find out what their issues are actually because in our opinion this policy is very clear but if there are any issues involved, we will find out.

Any clarification is good. But it has come in at a time when the largest, $16 billion e-commerce deal was concluded in India between Walmart and Flipkart. Amazon has committed about $5 billion to the Indian market. Will policy clarifications like these end speculation and not force companies to change their business models?
I am very sure that once they meet the secretary and get the clarification and their issues are discussed, they will understand that we are for FDI entering India. 

In fact, I will just give you the number. We got $61.85 billion of FDI and we are now targeting $100 billion, for which we have prepared a plan on which company can invest, what we can do. If we are really for foreign investment and are really getting it in large numbers, we are happy about it. We will have to assure all the foreign investors and domestic investors that we will have a stable and transparent policy. We have a long-term policy which people will understand properly. Sometimes the investors themselves say if we have clarification, if we have clarity, that will helps us. So that is what it is all about.

You are not just a minister. You hold two very important portfolios. You are also a trained and qualified CA. It is only fair that I ask you that question that when policies like these come, our experience in the past has been that people always find loopholes. When you say private labels should not be sold, do you not believe this is going to give rise to more convoluted ownership structures? 
This is something which you are presuming will lead to that. Once they meet the secretary, it is an ongoing process. They can come and meet the secretary to seek clarification about what it is and I will tell you the bottom line is very clear. We are not going to interfere within the business dealings of others -- be it domestic or whether it is a small or little we do not want to interfere in business models.

The only thing we want to do is we want to protect the small retailers in India. That is a part of the public policy. I do not think anywhere in the world you will a public policy which says that public policy by definition is for large number of people. It is for public good. We cannot say that we will harm their interest. That is not our intention at all. At the same time. without harming the interest of a private small retailers in India, if we can get foreign direct investment and they can also do the business in a transparent way which is good for them, good for the economy, even good for the retailer, that can be a business model.

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