Govt to come out with definition of eCommerce

The government is working on the definition of ‘eCommerce’ to clear the air over key issues such as taxation and foreign investment in the burgeoning sector.

Commerce and Industry Minister Nirmala Sitharaman said that her ministry has received inputs from almost all the states on the issues related with FDI in the eCommerce segment. When asked whether the states are favouring FDI in the sector, she said, “Let’s see. We will at least come out with some definition of what eCommerce is.”

“We have got the inputs from the states. We are in the process of putting it all together,” Sitharaman said.

The minister on July 15 chaired a meeting of states on the issues related to foreign direct investment (FDI), the definition and taxation in the eCommerce sector. The states were asked to offer their views and comments on the matter.

After the meeting, officials had indicated that the ministry would come out with a detailed clarification on the matter, as brick and mortar shops have raised serious concerns over the domestic eRetail players.

As per the current FDI policy, eCommerce activities refer to the “activity of buying and selling by a company through the eCommerce platform”.

“There is no clear definition as of now. It is creating confusion among new start-ups. The government should come up with a detailed definition,” PayU Money Head, Channel Partnerships, Paritosh said.

Industry experts said that the government needs to define the term marketplace and also elaborate as to what constitutes retail and wholesale trading on online platforms.

At present, 100 per cent FDI is allowed in business-to-business (B2B) eCommerce and not in the retail segment.

Global retail giants as well as some domestic eRetailers want the government to relax the foreign investment norms in the the space. Rise in Internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops. According to estimates, the sector’s size is around $5 billion annually.