CHENNAI: The Tamil Nadu government has urged the Centre to bring in a thorough e-commerce law to protect consumers and to ensure a level playing field for those in the ‘physical’ retail space. The State government also expressed its fears of retail trading by e-commerce units.
Speaking at a stakeholders consultation meeting, New Delhi on specifying suitable guidelines for e-commerce, M C Sampath, Minister for Commercial Taxes and Registration said any policy action by the Centre must level the playing field between e-tailers and brick-and-mortar (B&M) shopkeepers.
“A monitoring mechanism must ensure that FDI rules are not violated or by-passed by e-commerce platforms or sellers, harming the interests of B&M retailers,” the Minister said.
This has been a long-pending demand of traders associations and this affirmation from the State is being seen as a positive sign.
“This omnibus law call by the TN government is something that is much needed and other states and the Central government should note this. Manufacturers are selling products at lower prices to e-commerce units and at higher prices to B&M retailers. This is an unfair,” said TA Vellayan, president, Tamil Nadu Vanigar Sangangalin Peravai.
“Either these units have to be banned or measures like a Maximum Production Price made visible on the product, just like an MRP, so that people know what margins are being offered. The TN government’s position is laudable,” said Vellayan.
With e-commerce growing rapidly - market studies set the estimated revenue to hit `1 lakh crore by the end of the year - almost half (41%) the consumers were from South India. Sites like Flipkart, Amazon, Snapdeal and Jabong have constantly reinforced that states like Tamil Nadu contribute heavily to their revenue.
Keeping this is mind, Sampath cautioned the Centre that the misuse of B2B (Business to Business) platforms to enable B2C (Business to Customer) transactions would also upset the level playing field between B&M stores and e-commerce entities.
He also said that almost all e-Commerce players seemed to be by-passing the FDI policy by adopting a marketplace model.
“The marketplace model is a clear ploy to circumvent the FDI norms in B2C transactions. While there is no official definition of such models, there appears to be an effort to convey that e-commerce players are only facilitators helping the sale of goods owned by a seller to a purchaser without getting into ownership of such goods, and hence do not amount to retail trading. This does not appear acceptable. The definitions need to be worked out so that the intended policy of restricting and regulating FDI in retail trade does not get stuck in definitional loopholes,” the Minister added.