India looking at foreign e-commerce investment rules to ensure they comply with “spirit”

India is looking into its foreign investment rules governing the e-commerce sector to ensure that the industry follows the spirit of the regulations and maintains a level playing field for all sellers on the platforms, the trade minister said.

The comments by Piyush Goyal on Tuesday are the first direct confirmation of the internal deliberations, after Reuters last month reported that India was considering revising its foreign investment rules for e-commerce. New rules may compel companies such as Amazon.com Inc to restructure their ties with some major sellers.

“There are certain complaints from consumers and from small retailers about certain practices of the e-commerce companies, which are under investigation,” Goyal told a news conference.

“We are also considering certain clarifications to ensure that the e-commerce sector works in the true spirit of the law,” he said, after being asked if the government is looking anew at the foreign direct investment policy for e-commerce companies.

India allows foreign e-commerce companies to operate only as a marketplace to connect buyers and sellers. It bars them from holding inventories of goods and directly selling them on their platforms.

India’s bricks-and-mortar retailers have for years accused Amazon and Walmart Inc-controlled Flipkart of creating complex structures to bypass those rules. The U.S. companies deny this.

The foreign e-commerce firms have also been expanding their private label offerings, which often have prominent placement on their platforms.

Goyal said e-commerce platforms needed to be “agnostic”, and not promote their own products or have any algorithms that could influence preferences for consumers.

“The platform’s only a service provider. And those who break that law, will certainly have to respond to our concerns and correct their business practices at the earliest,” the minister said.-Reuters

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