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All e-tailers now must register entity in India Draft Policy Calls For Curbs On Foreign Retailers

February 24, 2019 05:17 AM


All e-tailers now must register entity in India
Draft Policy Calls For Curbs On Foreign Retailers

New Delhi/Bengaluru:

Consumer protection and how data generated is used is at the heart of the draft e-commerce policy that was introduced by the government on Saturday. The 41-page document also puts a slew of restrictions on how foreign online retailers, including fastgrowing Chinese e-commerce firms, operate in India. Restricting cross border flow of data and leveraging it to help startups are also some of the other key measures proposed in the policy.

The draft policy, for which public feedback has been sought by March 9, aims to strengthen consumer rights with regards to counterfeit products and the overall grievance mechanism, apart from putting in measures to stem the flow of goods through illegal means into the country. The draft policy comes after the government updated the FDI policy for online marketplaces in December which puts curbs on how large foreign e-tailers operate in India.

“All e-commerce websites and applications available for downloading in India must have a registered business entity in India as the importer on record or the entity through which all sales in India are transacted. Consumer/business payments from Indian banks and payment gateways to unauthorised and unregistered (GST non-compliant) sites/apps shall be barred,” the draft policy stated.

Under current norms, consumers can shop directly from foreign websites irrespective of whether they are registered in India or not. For instance, several China-headquartered e-tailers, including Shein and Club Factory have not only been doing brisk business in India but have been allegedly sending goods directly to consumers in India in the guise of ‘gifts’ thus managing to escape import duty and GST.

“In view of the misuse of the ‘gifting’ route, as an interim measure, all such parcels shall be banned, with the exception of life-saving drugs,” the government has proposed.

While Amazon and Walmart-backed Flipkart said they are studying the draft, a spokesperson for homegrown e-tailer Snapdeal said, “The draft policy’s categorical rejection of inventory based e-commerce model must be followed by effective implementation of FDI norms to ensure marketplaces do not own or control inventory, directly or indirectly.”

If the seller fails to prove the authenticity of the product, the marketplace would have to take it down and remove all information of the same, the government proposed. Similarly, all e-commerce sites/apps available to Indian consumers (displaying prices in rupees) must have MRP on all packaged products, physical products and invoices

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