Wednesday 26 June 2019

Goyal asks officials to demand yearly e-commerce statutory audits

Goyal asks officials to demand yearly e-commerce statutory auditsBENGALURU| NEW DELHI: Commerce and industry minister Piyush Goyal has asked officials to work with the Reserve Bank of India (RBI) to fast-track the implementation of a clause in Press Note 2 that directs e-commerce companies to submit statutory audits to the central bank annually.

In a meeting on Monday, Goyal sought the clarification during an interaction with the top e-commerce and online companies including Amazon, Walmart-owned Flipkart, Snapdeal, Shopclues, Swiggy, Zomato, UrbanClap, Udaan, MakeMyTrip and Yatra.

Press Note 2, introduced in December, asks e-commerce entities to furnish a certificate, along with the report of a statutory auditor, to the RBI confirming their compliance with the Note by September 30 each year.

“The minister was curious as to why the law had already been passed, but the RBI hadn’t introduced the notification yet. Goyal asked the DPIIT to work with the RBI to expedite the notification,” said a person who attended the meeting. Another government official who attended the meeting confirmed this.

Officials from the Department for Promotion of Industry and Internal Trade present at the meeting told Goyal that the RBI had reservations with regard to some technicalities.

The minister then urged the officials to work with the RBI to get the clause notified in the next one week. The move comes at a time when the government has cracked down on e-commerce companies, especially Flipkart and Amazon, over alleged non-compliance with India’s FDI norms, predatory pricing and other issues.

Goyal told the e-commerce companies that they needed to follow the FDI rules in both letter and spirit.

Amazon and Flipkart told ET they were complying with the law. “There was absolutely no questioning about Amazon’s compliance in the meeting. We have been and continue to remain completely compliant to all the laws of the land,” said an Amazon spokesperson.

“We take legal compliance seriously and we are fully compliant with applicable Indian laws including any audit requirements applicable to our industry by statutory auditors of the company under PN2,” said a Flipkart spokesperson.

While the broader PN2 guidelines came into effect on February 1, the clause seeking reports from statutory auditors was never notified by the RBI.

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