CAIT URGE PIYUSH GOEL TO REMOVE AMBIGUITY IN FDI POLICY – AMAR PARWANI

Report manpreet singh

Raipur chhattisgarh VISHESH CAIT National Senior Vice President Amar Parwani, chairman Magelal Maloo , Amar Gidwani State President Jitendra Doshi , States Working President Vikram Singh Deo, Parmanand Jain , Vashu Makhija, state General secretary Suriender singh , State Working General secretary Bharat Jain, and State Treasure Ajay Agrawal informed In a communication sent to Union Commerce Minister Shri Piyush Goel today, the Confederation of All India Traders( CAIT) has urged to prohibit foreign entities from indirectly engaging in inventory e-commerce which is strictly prohibited by the FDI Policy. The FDI Policy of India has always restricted FDI in Multi Brand Retail Trade (MBRT) and prohibited FDI in inventory e-commerce to protect the interests of the backbone of India’s economy i.e. small and traditional traders and to prevent them from being displaced by large foreign enterprises with deep pockets of foreign e-tailers-said CAIT

CAIT National Senior Vice President Mr. Amar Parwani & State President Mr. Jitendra Doshi said that to help India keep pace with the world, 51% FDI in MBRT (through government route) was permitted for the first time in 2013. In furtherance of the same, 100% FDI was permitted in marketplace model of e-commerce through Press Note 3 of 2016. However, a serious conflict in certain provisions of the FDI Policy arose because of which foreign e-commerce platforms have been indirectly carrying out inventory e-commerce in food/grocery segment.
The CAIT narrated the provision
“5.2.15.2.3 GUIDELINES FOR FOREIGN DIRECT INVESTMENT ON E-COMMERCE SECTOR
ii) FDI is not permitted in inventory-based model of e-commerce.”
Provision for Manufacturing sector
“5.2.5.1 Subject to the provisions of the FDI policy, foreign investment in ‘manufacturing’ sector is under automatic route. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce, without Government approval.”
“5.2.5.2 Notwithstanding the FDI policy provisions on trading sector, 100% FDI under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India.”
Both Mr. Parwani & Mr. Doshi said that as per 5.2.15.2.3, it is clear that FDI in inventory e-commerce is strictly and expressly prohibited. As per 5.2.5.1, FDI is permitted under the automatic route for a manufacturer (who produces goods himself) and only the manufacturer is permitted to sell his own goods (manufactured by him in India) through wholesale and retail, including through e-commerce. The conflict is created by 5.2.5.2 which states that notwithstanding the provisions on trading sector, “100% FDI under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India.”

This provision gives an impression that in grocery/food sector, 100% FDI is permitted not only for manufacturing of food/grocery goods in India but also for the trading (through wholesale, retail and e-commerce) of food/grocery goods. By hiding behind this provision, Amazon and Flipkart have been carrying out inventory e-commerce by trading (through e-commerce) goods manufactured in India by third-party manufacturers and selling them as private labels on their own platforms. This not only violates clauses 5.2.15.2.3 and 5.2.5.1 but also the intent of the FDI Policy in prohibiting FDI in inventory e-commerce-said the trade leaders.

The CAIT has urged Mr. Goel to issue necessary directions to amend clause 5.2.5.2 of the FDI policy to remove the discrepancy and to make the intent of the Government clear to one and all.
Thanks
Suriender singh
State General secretary
Mo. 7000147979