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Foreign online retailers will have to register entities in India if they wish to create e-commerce platforms in the country. In addition to ensuring that all shipments of goods are routed through customs, the proposed e-commerce policy proposed.
This decision has implications for Chinese online retailers such as Shein, AliExpress and Romwe, who may need to create entities in the country to manage their online platforms. "This essentially means that all foreign entities can not engage in e-commerce without Indian presence," said Atul Pandey, partner of Khaitan & Co., by phone to BloombergQuint. "This could have an impact on online retailers who currently have no presence in India."
The draft e-commerce policy released on Saturday stated that any sites or e-commerce applications available for download in India had to have a registered business entity in India as a registered importer or as an entity by which all sales in India are made.
In the past two years, several Chinese online fashion portals, such as Shein, Romwe and AliExpress – which also provides electronics and smartphones – have increased their business and market share in the country. Redseer estimates that these e-commerce platforms have captured more than 5% of the global online fashion market, with Tier 2 and 3 cities accounting for 30% of their sales.
According to Shayak Mazumder, general manager and founder of the Eunimart local cross-border e-commerce platform, the total number of shipments from Chinese e-commerce platforms is around 2 lakhs a day.
The proposed rules on foreign e-commerce websites were put in place after several vendor organizations, including the All India Online Vendor Association, wrote to the Ministry of Consumer Affairs to review the operation of Chinese e-commerce websites. "Some of the players misused the rules and sent gifts to Indian customers for cheaper products, to avoid tariffs and the goods and services tax," said Mazumder, adding that companies will now have to officially register an importer. set up an entity in India to track each product sold.
The draft policy also recognized the misuse of the "gifts" route and proposed to ban all such parcels, except life-saving drugs. He also added that any non-compliant e-commerce application or website would not be allowed to operate in India.
AliExpress, Shein, Romwe, did not respond to an email requesting comments.
The 41-page draft document, for which comments were requested before March 9, addresses six major issues in the e-commerce sector. These include data, infrastructure development, e-commerce markets, regulatory issues, stimulation of the national digital economy and export promotion through e-commerce.
Flipkart, backed by Amazon and Walmart, said he was studying the draft, while Snapdeal welcomed the decision and said the categorical rejection of the stock-based e-commerce model by the draft policy must be followed by own or control stocks, directly or indirectly.
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