Addition to conditions for E-Commerce Activity

In order to tighten control on activities conducted by entities under E-commerce activities, Department of Industrial Policy and Promotion vide Press note 2 (2018 Series) dated 26 December 2018 has altered point 5.2.15.2 of Consolidated Policy Circular 2017 i.e E-commerce Activities by adding the following to existing conditions :

1. Ownership and control over the inventory defined: Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.
2. Equity participation or control on inventory by e-commerce marketplace entity or its group companies: An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.
3. E-Commerce marketplace entity to perform on fair and non-discriminatory manner: Services should be provided by e-commerce marketplace entity or other entities in which e-commerce entity has direct or indirect equity participation or control, to vendors on the platform at arm’s length and in a fair and non- discriminatory manner.
4.  E-Commerce marketplace entity cannot mandate the sale of any product exclusively on its platform.
5.  Annual Compliance Certificate: Companies carrying E-Commerce activities have to annually furnish certificate along with report confirming compliance of e-commerce guidelines by statutory auditor. The said certificate is to be filed by 30 September for the preceding financial year.

The amendment is effective from 1 February 2019.