India's finance ministry objects to 'excessive' e-commerce rules
- India's e-commerce market is expected to grow to $188 billion by 2025
- Proposed rules to regulate the sector have drawn objections from Ministry of Finance
- This could force a rethink of the policy
India's Ministry of Finance has raised objections to the Central government's planned push to further regulate the country's e-commerce market. The ministry has described some of the proposals as "excessive" and "without economic rationale," and the concerns are likely to force the government to rethink it policy. In one of the at least dozen memos accessed by a news agency, the finance ministry has said the proposed amendments are likely to have "significant implications/restrictions on a sunrise sector and 'ease of doing business.'' It has called for caution to ensure that the proposed measures remain 'light-touch regulations.'"
The Competition Commission of India launched a preliminary antitrust probe against Amazon and Flipkart last January following the Delhi Vyapar Mahasangh’s claims that unfair and illegal practices by e-commerce giants were taking a toll on local retailers.
Both companies lost appeals against the probe in Kerala High Court and Supreme Court of India.
Soon after the Supreme Court ruling in August, Amazon announced to “mutually” discontinue its seven-year-old joint venture with Indian billionaire and Infosys Ltd. co-founder Narayana Murthy's company Catamaran Ventures.
Accounting network Grant Thornton expects India's e-commerce sector to be worth $188 billion by 2025.
"The ministry of finance raising such concerns would likely spur a rethink of the policy," Suhaan Mukerji, managing partner at India's PLR Chambers, told Reuters.
In June, the Ministry of Consumer Affairs proposed to limit 'flash sales' on e-commerce websites, drawing protests, among others, from the Tata Group, which plans an e-commerce expansion. The ministry's secretary, Leena Nandan, has acknowledged "wide and varied diverse views" on the proposed new rules by stakeholders.
The finance ministry, the ministry of corporate affairs and the the influential policy-making body NITI Aayog have all raised objections in memos reviewed by Reuters regarding the Ministry of Consumer Affairs' proposals.
NITI Aayog's vice chairman, Rajiv Kumar, in a July 6 letter to the Minister of Commerce Piyush Goyal, said the rules could hit small businesses
"Moreover, they send the message of unpredictability and in-consistency in our policy-making," Kumar wrote, according to Reuters.