Revised FDI e-commerce policy could cost India momentum gained from digitisation of small businesses

In this era of fragmented production chains and digital commerce, the domino-effect of policies and regulations is greatly amplified. Policies, which address focused-questions within specific markets, have a wider impact on the economy through these industries’ linkages with others. However, these considerations have not been adequately recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) in the wider e-commerce policy that has been floated for consultation or the FDI policy released in December last year. While the policy addresses concern about transparent and fair competition in the e-commerce market, it has not taken into account the interests of many other stakeholders in the industry, such as small businesses.

Limiting Scale

The new policies could potentially limit the ability of a marketplace to incentivize vendors, especially small vendors, to utilize e-commerce as a means to access new markets. This could mean losing the momentum that India has gained in promoting benefits from digitisation to small businesses or SMEs.