The recent foreign direct investment (FDI) guidelines on e-commerce will curb anti-competitive practices and bring in a level-playing field between offline and online entities, Commerce & Industry Minister Nirmala Sitharaman said on Monday.
While allowing 100 per cent FDI in the market place-based model of e-commerce (where an entity provides a platform to act as a facilitator between the buyer and the seller), the norms also specified that market place e-commerce entities will not directly or indirectly influence the sale price of goods and services. A section of experts had raised concerns regarding this clause.
Ms. Sitharaman said she was encouraged by the feedback from experts that the norms will help in checking predatory pricing and discount-giving exercises. Predatory pricing is an anti-competitive practice (under the Competition Act) and it refers to a dominant player reducing prices to a very low level to edge out competing players from the market. In most cases, after the rivals are driven out, the dominant firm increases the prices and makes huge gains.
While the government does not want to interfere in the market, it wants to “ensure Indian players and Indian market situation do not get unnecessarily skewed to distort any free trade practices,” Ms. Sitharaman said
Pointing out that the guidelines have brought in a level-playing field to the brick-and-mortar firms and online entities, she said: “E-commerce has been encouraged, but obviously it’s not going to restrict the consumer.”
The minister also said India hopes to conclude the negotiations for a proposed free trade agreement (FTA) with the European Union (EU) and Australia.
“We (India) have made our offers. But refined or enhanced offers (from Australia) are awaited. In services trade, we are negotiating for a better offer from Australia having given our own wish-list,” she said.
