Insiders reveal that during a high-level review meeting, top officials informally decided that finalizing the e-commerce policy isn’t on the immediate agenda. The Ministry of Commerce has stayed mum on the matter, leaving industry watchers speculating.
The initial draft, rolled out in February 2019, aimed to tackle everything from data regulation to consumer protection. But feedback from the industry labeled it a Herculean task. Since then, the Commerce Ministry and the Department for Promotion of Industry and Internal Trade (DPIIT) have been reworking it.
“Since then, the industry hasn’t seen a complete revised draft. Last year, a presentation with broad policy aims was shown to industry leaders, emphasizing consumer-centric practices,” said a senior executive from an e-commerce firm.
Recognizing the sector’s job creation potential seems to be a key factor. With around 2 million workers earning between Rs 15,000-20,000 monthly, the government is treading carefully.
FDI Numbers: The Slump Is Real
The latest DPIIT data shows a 3.5% year-on-year drop in net FDI inflows to $44.42 billion in FY24, marking a five-year low. DPIIT Secretary Rajesh Kumar Singh attributes this to geopolitical instability, inflation, and higher interest rates in developed markets. Singh revealed the government’s ambitious target of $100 billion in FDI inflows over the next five years, with a focus on liberalizing FDI policies.
Controversial Provisions: Industry Pushback
Rumors about the new draft restricting private labels on e-commerce platforms and disallowing adjacent services like logistics and payments have sparked opposition. “The basic premise of a large e-commerce platform is that economies of scale allow them to bundle various services together. You can’t suddenly wake up one day and strike at the heart of the entire business model after billions of dollars have been invested,” a former e-commerce executive commented.
With separate laws emerging on data protection, payments, and digital competition, the Commerce Ministry and DPIIT are rethinking the e-commerce policy’s scope. Last year, Rohit Kumar Singh, then consumer affairs secretary, noted that differing departmental goals and extensive stakeholder meetings were causing delays.
Initially, the policy aimed to protect domestic businesses and small sellers from the Amazon-Flipkart duopoly. However, the government now encourages these sellers to join the Open Network for Digital Commerce (ONDC), touted as a neutral growth platform.
The Big Picture
India’s $60 billion online retail market is dominated by Flipkart and Amazon, which control over 80% of the market, according to AllianceBernstein. Walmart has invested over $24 billion in Flipkart and PhonePe since 2018, while Amazon plans to invest $30 billion in its e-commerce and cloud businesses in India by 2030.
As the government balances regulatory ambitions with attracting foreign investments, the e-commerce policy remains in flux. Stay tuned for more updates on this evolving story, and what it means for the future of India’s bustling e-commerce landscape.
