PMO will soon address all the complaints of E-commerce companies
The Indian Prime Minister’s Office is looking forward to address complaints by various e-commerce firms about the current rules, which are too restrictive pending the drafting of a longer-term plan for the key job generating sector by a NITI Aayog committee.
A meeting of numerous top officials was held at the PMO to discuss a range of issues which included taxation, marketplace curbs and the offline-online problem.
The prevailing issue
“There are a numerous issues confronting the sector, which also involves foreign investment, taxation,” said a senior government official. “The idea was merely to take a decision.” Centre has already made a committee under the NITI Aayog chief executive officer Amitabh Kant to review the e-commerce policies and issues which are faced by all companies.
The PMO was made to enter into the matter after ecommerce firm holders approached many departments with different issues and in the absence of a single official ministry.
Earlier the Department of Industrial Policy and Promotion (DIPP) issued a press release mentioning the foundation of a new foreign direct investment (FDI) framework for ecommerce forms aimed at creating a level playing field vis-à-vis brick and mortar businesses.
FDI allows 100% FDI in the marketplace model through the automatic route but these entities are not allowed to influence prices by offering discounts. Moreover, a single seller cannot account for more than 25% of sales on an online marketplace.
Last week, many offline retailers met finance minister Arun Jaitley to press their case and raise the issue of unfair competition by online players through what they described as mandatory discounting.
Taxation today has emerged as a major issue for the ecommerce sector along with restrictions imposed by the state governments.
Different stated like Gujarat have imposed separate entry tax on goods sold online while others want to impose value added tax above Centre’s service tax.
The e-commerce companies say that they only facilitate sales and are not sellers themselves so they should only pay service tax. States like Uttar Pradesh even require consumers to file declarations with the state VAT department for goods above Rs5, 000.
The NITI Aayog committee is expected to submit its report in a month’s time, spelling out a clear framework and bringing about predictability in the overall sectoral policy. Morgan Stanley estimates India’s ecommerce market will swell to $119 billion by 2020.
The government sees ecommerce as having a huge potential for job creation by providing market access to small entrepreneurs and businesses that would find setting up physical retail establishments too expensive.