Commerce and industry minister has said that the government would not allow multi-brand retail trade by foreign e-commerce companies.
In 2018,Department for Promotion of Industry and Internal Trade (DPIIT) had tightened the foreign direct investment (FDI) rules for ecommerce companies
The new rules were (a)If an entity is owned by an e-commerce marketplace(ECM),it cannot sell its products on the platform run by the same ECM (b)A single vendor can’t account for more than 25% of sales in an ECM or platform and (c)The rules puts curbs on exclusive partnerships with brands or providing favorable services to a few vendors.
In 2016,the government had permitted 100% FDI in the marketplace model of e-commerce,but not in the inventory-based model.In a marketplace model,ECMs act as platform for vendors to sell their products.In the inventory-based model,ECMs own and sell products.
These rules was directed at protecting small vendors on e-commerce websites.It seeks to ensure small players selling on the portals are not discriminated against in favour of vendors in which e-commerce companies have a stake.It will also ensure a level playing field for all vendors looking to sell on the e-commerce portals.
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