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- The Reserve Bank of India(RBI) is expected to come up with a mechanism for e-commerce marketplaces to submit their reports proving compliance with the FDI guidelines.
- According to the FDI norms by the Department for Promotion of Industry and Internal Trade (DPIIT),an e-commerce marketplace entities are required to furnish a certificate along with a report of statutory auditor to the RBI confirming compliance of the guidelines every year for the preceding financial year.
- In 2018,DPIIT had tightened the foreign direct investment (FDI) rules for ecommerce companies
- The 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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