India is presently
witnessing an e-retailing era. This is a golden time for e-retailing
entrepreneurs who have multiple domains to explore. This is also a
challenging period for the Indian government that is clearly
struggling to deal with technology related issues. Some of these
issues include taxation
of online transactions by companies like Google,
foreign
direct investment (FDI) regulations for e-retailing
companies, techno
legal framework for online businesses, cyber
security issues of e-retailing businesses in India,
e-commerce
dispute resolutions, etc.
As per the existing FDI
policy, contained in the "Consolidated
FDI Policy Circular 2015" (pdf) (FDI Policy) as
amended from time to time, FDI up to 100% under automatic route is
permitted in Business to Business (B2B) e-commerce. No FDI is
permitted in Business to Consumer (B2C) e-commerce. However, FDI in
B2C e-commerce is permitted if certain conditions are fulfilled.
However, companies are
violating these norms by accepting FDI by citing different purposes
for the use of such FDI money. Both the Reserve Bank of India (RBI)
and Enforcement Directorate (ED) are aware of these issues but none
of them has taken any action against the guilty individuals and
companies. RBI is also maintaining a vigil over e-commerce gateway
operators, many of whom store financial information about Indians on
overseas servers, but is not imposing new stringent regulations on
new form of transactions.
In other such
developments, the Maharashtra’s FDA ordered filing of FIR against
Snapdeal,
its CEO Kunal Bahl, Directors and distributors for online sale of
prescription drugs. There are many techno legal requirements to open
online
pharmacy stores in India that almost all e-retailing fail
to adhere to. To deal with this nuisance, a dedicated online
pharmacy law is needed for India. For some time it was
believed
that the Telecom Regulatory Authority of India (TRAI) may be given
the task to regulate e-commerce in India. However, TRAI refused to
take the additional responsibility in this regard.
As far as FDI is
concerned, the documents titled Consolidated
FDI Policy Circular Of 2015 By DIPP (pdf) and Guidelines
For Foreign Direct Investment (FDI) On E-Commerce 2016 Series
(pdf) would be helpful for detailed insight. However, Indian
government must be ready for new challenges from global players. For
instance, recently US sought trade
rules for e-commerce and cloud computing under the WTO
banner. Similarly, deep discounting and predatory
pricing issues are also required to be resolved by Indian
government. Taxation
issues are already vexing Indian government for long. We
hope that these issue would be resolved by Indian government very
soon.
