Login With Google
E-commerce and new rules
Why is it in the news ?
- As the new FDI rules for e-commerce become applicable from 1st February, online retailers have started realigning their platforms to ensure compliance.
- Further, products sold by sellers Cloudtail and Appario, in which Amazon holds equity stake indirectly, have also been removed from the platform.
More in the news
- As per new norms, e-commerce entity providing a marketplace will not exercise ownership or control over goods purported to be sold.
- The government also prohibited e-commerce companies from entering into an agreement for exclusive sale of products.
- As per the revised guidelines, a vendor cannot procure more than 25% of products from group companies of the same marketplace where they intend to sell them.
- The decision to introduce the new norms follows complaints by small traders, who contend that deep discounts offered by the likes of Amazon and Flipkart are driving them out of business.
- The new guidelines require marketplaces to furnish a certificate along with report of a statutory auditor to RBI confirming compliance of the norms by September 30 every year, for the preceding financial year.
Concept
There are two important types of e-commerce model :
(1) Marketplace based model of e-commerce means providing an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller.
-Currently 100% FDI is allowed under this model.
(2) Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.
-Currently India does not allow FDI under this model
Source
Indian Express.