Witnessing the stellar rise of the Indian e-commerce backed by pandemic-induced buying, the government has rolled out several initiatives and programmes to encourage the growth of e-commerce trade in India. Taking inspiration from China’s biggest online marketplace Alibaba, India is gearing up to launch an online marketplace for the MSME sector that will boost small businesses to sell products online. As per a report from the Indian Brand Equity Foundation (IBEF) growth of e-commerce in India is estimated to grow $200 billion by 2026 from $38.5 billion in 2017. Here are some of the current government schemes and programmes rolled for the e-commerce sector:
Government Schemes and Programmes for E-Commerce
Easy onboarding of Small Businesses in the online marketplace
The Department for Promotion of Industry and Internal Trade (DPIIT) is planning for a systematic process to onboard retailers on e-commerce platforms. DPIIT has established Open Network for Digital Commerce (ONDC) that will set protocols for cataloguing, vendor discovery, and price discovery. This initiative aims to create a neutral e-commerce platform that will provide easy access to small and medium businesses to e-commerce. The concerns regarding receiving a large number of complaints of malpractices by the existing e-commerce companies have made the government take this step.
As per a report from the Indian Brand Equity Foundation (IBEF) growth of e-commerce in India is estimated to grow $200 billion by 2026 from $38.5 billion in 2017.
New National Retail Policy
To revive the retail industry that is reeling under a slowed growth rate of 9 percent compared to 10-11 percent in the past few years as per Kearney, the government in its National Retail Policy has identified five key areas namely- ease of doing business, rationalisation of the licencing process, digitisation of retail, focus on reforms, and an open network for digital commerce. The new National Retail Policy is focussed to integrate the offline retail and e-commerce with regards to the reduced footfalls in the retail stores. The report from CII-Kearney says that the retail policy needs to emphasise more in rapid technology and modernisation by traditional retailers.
The Consumer Protection Rules
Under Consumer Protection (e-commerce) Rules 2020, it has been mandated by the Consumer Affairs that the e-commerce players need to display certain information such as country of origin, total price of goods and services along with a break-up of other charges, expiry date of goods offers to help consumers make an informed decision at the pre-purchase stage. Under the new rules, e-commerce players cannot impose cancellation charges.
Mandatory Permanent Account Numbers
For foreign e-commerce players to operate in India, the government schemes have mandated to have permanent account numbers (PAN). Companies that do not have PAN are imposed with a 2 percent tax in the FY21 budget on the sales of goods or services to a non-resident e-commerce operator. However, the government wants to give equal chances of business opportunities to foreign e-commerce companies by exempting them from paying 2 percent digital service tax if goods and services are sold through the Indian arm of foreign e-commerce players.
New FDI Policy for E-commerce Majors
The FDI rules that once welcomed the maximum participation of maximum players by hiking the limit of FDI up to 100 percent is going through a rough patch ever since, it has found that foreign e-commerce giants Flipkart and Amazon are violating the FDI rules by being biased towards few sellers and are holding stakes in sellers directly or indirectly, etc. In a bid to protect domestic retailers against the risk of getting excluded the government is revisiting the FDI policy to create a level playing ground for the Indian players.
What is in it for the Start-up?
The government is tightening the FDI policies for the foreign e-commerce players to accommodate Indian businesses and homegrown e-commerce companies to get a fair playing ground for business. Besides, the FDI government’s digitisation efforts by bringing in programmes and initiatives such as Umang, Start-up India, Skill, etc, will help small businesses to take their business online.