Norms must be simplified for e-commerce to thrive: Report ‘Single ministry for FDI; capacity building of retailers can help’

The government should come up with simpler policies on broad norms for foreign companies or for receiving Foreign Direct Investments (FDI) in India, and not micro-manage the e-commerce business on various aspects, says a new report released today by Bharti Institute of Public Policy, an autonomous policy think-tank under the Indian School of Business, as part of a one-year research study on online retail. The report, commissioned by Empower India, analyses the scope and challenges of e-commerce industry in India and puts across significant policy changes for the sector’s growth and development.

The policies governing FDIs in the country have been complex, overlapping and have many endpoints in terms of involvement of several ministries and government bodies, which make it difficult for various entities to operate and prosper. “Simplification of norms for conducting business in the retail and e-commerce sector should be formed by a single ministry in consultation with other related government and non-government bodies,” the report suggests, adding that the business norms should also be articulated timely and clearly to avoid interpretation challenges to especially foreign entities.

“India’s socio-economic diversity and varying infrastructure facilities require a variety of models to fulfill the country’s retail needs, which range from kirana shops to supermarkets to online retail. A customer-centric e-commerce domain requires FDI for growth; capacity building for small retailers to ensure their smooth online transition, and alternative platforms to be adopted by the government for a sustainable and comprehensive e-commerce growth,” explains Dr Avik Sarkar, Associate Professor, Bharti Institute of Public Policy, and lead author of the report.

To onboard small retailers and sellers to online channels and help them transform their businesses into digital formats, the government can devise open-source software for operational digitalisation, and provide financial aids or loans on low-interest to small businesses for such transition, the report suggests. “It is also important for policymakers to explore alternate e-commerce platforms, which can ensure fair trade and competition and benefit both small sellers and end-customers,” adds Prof Sarkar, explaining recommendations from the report.

Based on dialogue with experts, government officials, sellers and e-commerce companies, the research report documents policy interventions in the e-commerce ecosystem into four broad areas: Policy Simplification and Clarity; Online-Offline parity; Small Indian Retailers and Alternative Platforms.

The full report is available for public access at: https://www.isb.edu/en/research-thought-leadership/research-centres-institutes/bharti-institute-of-public-policy/Research/Reports/Policy-recommendations-for-Foreign-Direct-Investments-for-e-commerce-sector-of-India.html

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