In 2020, the Department of Consumer Affairs (DoCA) in the Ministry of Consumer Affairs, Food and Public Distribution had issued the Consumer Protection (e-commerce) Rules under Section 101 of the Consumer Protection Act, 2019. The rules lay down the conditions with which e-commerce firms should comply. Amongst others, these bar affiliated entities from selling on e-commerce platforms and restrict ‘flash sales’ (discounts or promotions they offer for a short duration) and disallow the seller from using the name or brand associated with that of the marketplace e-commerce entity for the promotion of goods. Within a year, the government has proposed certain amendments to these rules in the form of Consumer Protection (e-commerce) (Amendment) Rules, 2021. These amendments include restricting business-to-business, or...
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Category: Foreign investment & other inflows
FDI in retail: The conundrum persists
The way forward is to legitimize Foreign Direct Investment in Indian online retail along with 100 per cent FDI in offline retail without any riders In 2020, the Department of Consumer Affairs, in the Ministry of Consumer Affairs, Food and Public Distribution issued the Consumer Protection (e-commerce) Rules, under Section 101of the Consumer Protection Act, 2019.The rules require all e-commerce entities that are not established in India, but intending to operate here to register with the Department for Promotion of Industry and Internal Trade in the Commerce Ministry, bar affiliated entities from selling on e-commerce platforms and restricting ‘flash sales’, and disallow seller from using the name or brand associated with that of marketplace e-commerce entity for promotion of goods....
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FDI in retail – conundrum
In 2020, the Department of Consumer Affairs (DoCA), in the Ministry of Consumer Affairs, Food and Public Distribution had issued the Consumer Protection (e-commerce) Rules, under Section 101of the Consumer Protection Act, 2019. The rules require all e-commerce entities that are not established in India, but intending to operate here: (i) register with the Department for Promotion of Industry and Internal Trade (DPIIT) in the Commerce Ministry; (ii) bar affiliated entities from selling on e-commerce platform and restricting ‘flash sales’(the discounts or promotions that ecommerce firms offer for a short duration); (iii) disallow seller from using the name or brand associated with that of marketplace e-commerce entity for promotion of goods. Within a year, the government has proposed certain amendments...
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FDI in retail: Clear the maze
The government should legitimise direct selling by foreign companies in Indian retail without any riders In the backdrop of complaints by the Confederation of All India Traders (CAIT) regarding violation of the Foreign Direct Investment (FDI) policy by global e-commerce players, Amazon and Walmart-owned-Flipkart etc, the Ministry of Consumer Affairs has proposed a set of new rules called Consumer Protection (e-commerce) Rules, 2020 which the government proposes to implement after factoring in the views of all stakeholders. The rules require all e-commerce entities that are not established in India, but intending to operate here: (i) register with the Department for Promotion of Industry and Internal Trade (DPIIT) in the Commerce Ministry; (ii) bar affiliated entities from selling on e-commerce platform...
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FDI in retail: Remove the smokescreen
A pragmatic approach would be one wherein the Modi Govt legitimises direct selling by foreign companies in Indian retail in all forms For the last couple of years, the Confederation of All India Traders (CAIT) was complaining about a blatant violation of the Foreign Direct Investment (FDI) policy and the Foreign Exchange Management Act (FEMA) by global e-commerce players like Amazon and Walmart-owned-Flipkart, etc. Addressing their concerns, the Ministry of Commerce and Industries in December 2020 asked the Reserve Bank of India and the Enforcement Directorate to take action against these global giants. Earlier this year, Commerce Minister Piyush Goyal promised to ensure that the e-commerce sector works “in the true spirit of the law”. As a follow-up, the Ministry of Consumer...
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Taxing MNCs — G-7 formula is erroneous
The source country should have the freedom to decide the tax rate it deems fit in sync with its policy imperatives The agreement reached by the Finance Ministers of advanced economies at the G-7 meeting on taxing MNCs stands on two main pillars, viz., a global minimum corporate tax (GMCT) rate of 15 per cent and secondly, “reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20 per cent of profit exceeding a 10 per cent margin for the largest and most profitable multinational enterprises”. They also agreed that while coordinating international taxation rules around these two pillars, concurrent efforts will be made for the removal of all Digital Services...
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India gets poorer, investors richer
The Corona pandemic may have brought about sharp deceleration in India’s economic growth – the sharpest ever during the last 4 decades or so – but has yielded a bonanza for the investors. The wealth of investors in the stock market as represented by the market capitalization of Indian equities (market value of shares multiplied by their number) almost doubled from around Rs 113 trillion (a trillion equals 100,000 crore) as on March 31, 2020 to Rs 226 trillion as on March 31, 2021. In contrast, India’s GDP at current prices declined from Rs 203 trillion during 2019-20 to Rs 197 trillion during 2020-21. As a result, the market capitalization to GDP ratio almost doubled from 56% during 2019-20 to...
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A flawed idea that the US must abandon
Imposing a global corporate minimum tax will interfere with the right of a country to determine its tax policy and impair its ability to galvanise the policy to achieve certain objectives The Joe Biden Administration is pushing for a Global Corporate Minimum Tax (GCMT) rate under the new international tax rules being coordinated by it with G20 countries. In 2017, the erstwhile Donald Trump Administration had introduced the US corporate offshore minimum tax called the Global Intangible Low-Taxed Income (GILTI). It is applied on the offshore incomes of US multinationals (MNCs) having subsidiaries in low-tax countries, at 10.5 per cent, which is half the Domestic Corporate Tax Rate (DCTR) of 21 per cent. US President Biden wants to double GILTI...
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Global corporate minimum tax – a flawed idea
The Biden administration is giving a big push for a global corporate minimum tax (GCMT) rate under the new international tax rules being coordinated by it with G20 countries. In 2017, the erstwhile Trump administration had introduced the U.S. corporate offshore minimum tax called “Global Intangible Low-Taxed Income (GILTI)”. It is applied on the offshore income of US multinationals (MNCs) having subsidiaries in low-tax countries @ 10.5% which is half the domestic corporate tax rate (DCTR) of 21%. Biden wants to double GILTI to 21% and correspondingly increase the DCTR to 28%. The US move is prompted by a tendency among MNCs (US companies included) to register in low-tax countries such as Singapore, Mauritius, Ireland etc and show their revenue...
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The Govt should avoid a Catch-22 situation
Team Modi should legitimise direct selling by foreign companies in Indian retail — not just online but also offline — without any riders In view of the complaints by the Confederation of All India Traders (CAIT) regarding blatant violation of the Foreign Direct Investment (FDI) policy and the Foreign Exchange Management Act (FEMA), 1999, by Amazon and Walmart-owned-Flipkart, Union Commerce Minister Piyush Goyal alluded to it while issuing a clarification to ensure that the e-commerce sector works “in the true spirit of the law.” Earlier in December 2020, the Ministry of Commerce had asked the Reserve Bank of India (RBI) and the Enforcement Directorate (ED) to take necessary action against these global e-commerce giants. The above actions may not enthuse when viewed...
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