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Traders’ body CAIT urges Piyush Goyal to modify Press Note 2 on FDI to curb alleged e-commerce malpractices

Traders’ body Confederation of All India Traders (CAIT), which represents 8 crore traders across 40,000 trade associations in India, has urged Commerce Minister Piyush Goyal for modification in the provisions of the 2018 Press Note 2 on FDI policy by the Department for Promotion of Industry and Internal Trade (DPIIT) to curb alleged malpractices by e-commerce marketplaces in India. Proposing amendments in a communication, CAIT requested Goyal to prohibit direct or indirect equity participation or manage more than inventory by marketplace entities, to generate a level playing field for all stakeholders, and prohibit FDI in inventory-based e-commerce and multi-brand retail in meals things. The association has also sought a periodic audit of e-commerce corporations for compliance verify and also urged for mandatory registration of just about every e-commerce business with DPIIT.

CAIT National President BC Bhartia and Secretary General Praveen Khandelwal even requested Goyal to extend the scope of the policy on entities in other segments such as travel, air booking, cab services, on the web meals delivery, or any other provide of goods or services by way of on the web mode. “Vide clause 5.2.5.1 100 per cent FDI is allowed in manufacturing sector under automatic route and is allowed to sell its products manufactured in India through e-commerce. Some foreign e-commerce companies in the inventory model are selling grocery and food in e-commerce under the garb of a selective reading to clause 5.2.5.2 which is a gross violation of the FDI policy both in letter and spirit. Such back door entry needs to be plugged,” Bhartia and Khandelwal stated in a joint statement.



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The government in its evaluation of the FDI policy in e-commerce had issued Press Note 2 in 2018 for clarity with respect to FDI provisions. The note had stated that e-commerce marketplaces will not workout ownership or manage more than the inventory and that the entity that has equity stake by e-commerce corporations or its group corporations or manage more than its inventory will not be permitted to sell its merchandise on the marketplace.

The government had held discussions final month on revision in FDI guidelines in e-commerce with market stakeholders. Goyal had stated in March that the government has received complaints against some e-commerce corporations with respect to the alleged FDI violation. “…necessary actions under the provisions of Foreign Exchange Management Act, 1999, have been taken for investigation by the Enforcement Directorate (ED),” Goyal had stated in a written reply to a query in the Lok Sabha.

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