DIPP, the Department of Industrial Policy and Promotion on Wednesday issued a set of additional guidelines for foreign direct investment (FDI) in the sector. The new regulations will take effect from Feburary 1 next year, said the DIPP regulation.
Experts said this might not only curb the activities of e-commerce companies, but also prevent some of them, such as Flipkart, from raising any more FDI. There is, however, a rider: There are no penal provisions. So, the government will not be able to prosecute any e-commerce firm that falls foul of the latest regulations.
A senior DIPP official said.“Despite this, we expect the latest changes to have a cascading effect on the industry. The new regulations may find their way into the policy itself.”
The DIPP circular said “an entity having equity participation by an e-commerce marketplace entity or its group companies, or having control on its inventory by a e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such a marketplace entity.”
Source: business standard