New e-commerce policy: How it will benefit the industry and expectations from Budget 2019

As the e-commerce industry is going to be affected by the revised e-commerce policy announced by the government last year, experts have spoken about various benefits and drawbacks which the e-commerce industry may expect in future.

The revised e-commerce policy will implement some strict rules over e-commerce business, with regard their selling procedure and FDI norms. According to the new policy, e-commerce platforms with foreign investments will not be able to sell products of companies in which they own equity. Moreover, they even cannot form marketing arrangement with sellers, indirectly or directly, to influence cost of the products.  The revised policy also restricts companies from more than 25 percent of their sales through any single e-commerce marketplace.

While big e-commerce platforms like Amazon and Walmart will face some issues from these policies with respect to their business models in India, some experts have raised opinions about benefits with respect to this revised policy. Nakkyun Chong, CEO and Founder of Avenue11- a Bengaluru-based e-commerce company for selling groceries, feels that there are some aspects of this new e-commerce FDI policy announcement and Budget 2019, which is going to help the e-commerce market leaders in India.

Chong believes that investments in digital infrastructure will lead to more connectivity of people with internet. “Looking forward, we believe that e-commerce growth will be boosted by two factors – first, a continued and strengthened focus on investments in digital infrastructure resulting in the reduction of data costs for the public and making the internet more accessible for all Indians”, he said.

He also mentioned that digital payments will increase the e-commerce penetration in the country. “Increasing incentives for digital payments over cash will not only boost digital growth, but also create a lower barrier to entry for the common man. We believe these two factors working in tandem will not just increase e-commerce penetration in the already technologically-adept Tier I cities, but also prove to be the driving force behind large-scale e-commerce adoption in Tier II and Tier III cities,” Chong further said.

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