E-commerce must not use muscle power of large capital: Piyush Goyal

This was in response to Ross blaming policy for Amazon's India investment cut.

Business Standard : While US Commerce Secretary Wilbur Ross blamed India’s e-commerce policy for US online retail giant Amazon’s cut in investment, his Indian counterpart Piyush Goyal attributed it to the company’s inability to engage in “predatory pricing’’ any longer.

In a war of words at the India Economic Summit, Goyal said the spirit of Indian law was to protect small trade which employed over 120 million and that multinational e-commerce should not use muscle power of large capital at low value to drive small retailers out of business.

“According to news reports, Amazon is spending one-third of what it spent the year before in capex. It would probably have spent a lot more in India if it didn’t feel that there was a diminution in growth due to some of those (e-commerce) policies. There is also that cost to India by the policy,” the US commerce secretary said.

Goyal argued that the spending cut was possibly due to other factors like over-investment in the previous years. “(Amazon) may have over-invested in previous years… I don’t know, I don’t run its business.” He added that maybe the firm now recognises that it can’t do “some of the things that it was possibly doing earlier”, referring to deep discounts by online companies.

India in February revised FDI norms for e-commerce, barring foreign-owned firms from selling through their affiliated entities and offering heavy discounts.

“India is very clear on its domestic and political compulsions. Around 120-130 million are dependent on small retail, with 50-60 million small shops present throughout the country… We welcome all e-commerce companies to work (in India) as agnostic platforms,’’ Goyal said.

He added, “Don’t try to look at structures that fall within the ambit of the law, but in some sense break the spirit of the law. That is the position of the government as far as the BJP is concerned.”

Budget impact: FDI cap in insurance sector may be raised to 74%

The govt is also looking to allow FDI in information utilities at 100% through govt approval route.

Business Standard : The government is planning another round of overhaul of the foreign direct investment (FDI) policy with changes across sectors including insurance, contract manufacturing, digital media, and information utilities, besides single-brand retail trade, in line with the Budget announcements.

The insurance sector could be opened up to 74 per cent FDI under the approval route to bring parity with the banking sector, according to proposals under consideration. The current 49 per cent foreign investment limit through the automatic route in insurance is likely to be maintained. “Banking is a more sensitive sector compared to insurance. There should be parity here,” said a government official.

For insurance intermediaries like brokers, insurance repositories, third-party administrators, etc, 100 per cent FDI may be permitted.

Digital media, which has been in the grey area as far as regulations go, may be capped at 26 per cent FDI for uploading of news and current affairs under the approval route. For streaming news and current affairs content, FDI up to 49 per cent could be permitted, again under the approval route.

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The proposal of the Department of Promotion of Industry and Internal Trade comes amid government concerns over an increasing circulation of fake news with penetration of internet.

“There has been a rise of news provided over internet. Fake news is detrimental to national security. It is pertinent to have specific provisions for digital media,” said a government official.

Currently, the FDI policy allows 49 per cent FDI in TV channels and 26 per cent in print media.

The government is also looking to allow FDI in information utilities at 100 per cent through government approval route and up to 49 per cent under automatic route. 

Currently, there’s no FDI rule for this category. “Information utilities are of key importance for the Insolvency & Bankruptcy ecosystem. With a large amount of data storage, there is a risk of data theft. Hence, government approval should be there for over 49 per cent,’’ said the official.