Lok Sabha Question No. 4137 (UNSTARRED), answered on 2025-03-25
Subject: E-Commerce Platforms
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri G Kumar Naik

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## UNSTARRED QUESTION NO. 4137.

TO BE ANSWERED ON TUESDAY, THE 25 TH  MARCH, 2025.

## E-COMMERCE PLATFORMS

## 4137.  SHRI G KUMAR NAIK:

Will the Minister of COMMERCE AND INDUSTRY वाणिज्य एवं उद्योग मंत्री

be pleased to state:

- (a) whether  the  Government  is  aware  of  the  impact  of  the  rapid  growth  of  ecommerce  quick  delivery  platforms  on  traditional  kirana  shops,  particularly regarding pricing and competition, if so, the details thereof;
- (b) if so, the details of measures are being taken to ensure fair trade practices and prevent predatory pricing, creating a level playing field between e-commerce platforms and small retailers, if not, the reasons therefor;
- (c) whether the Government is considering regulatory frameworks to protect the interests  of  kirana  shops  and  promote  their  integration  with  e-commerce platforms for mutual benefit and if so, the details thereof; and
- (d) the details of support mechanisms are being offered by the Government to help kirana shops modernize, improve their operations and remain competitive in the evolving digital economy?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

- (a) & (b): Pricing and discounting of products are business decisions driven by market forces.  However,  imposition  of  unfair  or  discriminatory  prices  (including predatory  pricing)  by  a  dominant  enterprise  or  group  is  prohibited  under provisions  of  Section  4  of  the  Competition Act,  2002.  The  Competition Commission of India (CCI) established under the said act decides matters of anti-competitive practices, including predatory pricing, on a reference by the aggrieved party. Action is taken as and when such allegations of anomalies and violations of existing laws are brought to the notice of the Government.

Additionally,  the  Foreign  Direct  Investment  (FDI)  policy  on  e-commerce and retail  sectors  reflects  the  Government's  intent  to  safeguard  local  business interests. Para 5.2.15.2 of the FDI Policy on e-commerce [as amended vide Press Note 2 (2018 Series) dated 26.12.2018 issued by the Department for Promotion of Industry and Internal Trade (DPIIT)], prohibits FDI in inventory based models of e-commerce, where the inventory of goods and services is owned by the e-commerce entity and sold directly to consumers. To safeguard and promote local business interests, the FDI Policy for Single Brand Retail Trade (SBRT) mandates that for foreign investment beyond 51%, 30% of the value of goods purchased should be sourced from India, preferably from Micro, Small,  and  Medium  Enterprises  (MSMEs),  village  and  cottage  industries, artisans, and craftsmen across all sectors. Similarly, the FDI Policy on MultiBrand Retail  Trading  (MBRT)  outlines  several  conditions  to  ensure  that  the benefits  of  FDI  in  the  sector  create  commensurate  forward  and  backward linkages. Furthermore, to curb opportunistic takeovers or acquisitions of Indian companies, amendments were made to the FDI policy via Press Note 3 (2020 Series). According to these amendments, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is  situated  in  or  is  a  citizen  of  any  such  country,  can  invest  only  under  the Government route.

- (c) & (d): The Government has been focusing on protecting the interests of small retailers and  traditional  kirana  stores,  safeguarding  local  business  interests  and promoting fair competition. Various measures in the form of Acts, Rules, and Policies have been put in place to ensure fair trade practices and a level playing field  and  act  against anti-competitive  practices  by  e-  commerce  platforms. Some of the Acts applicable to e-Commerce Sector are Consumer Protection Act, 2019; Consumer Protection (E- commerce) Rules, 2020; Competition, Act, 2002; Central Goods and Services (CGST) Act, 2017; Information Technology Act, 2000; Payment and Settlement Systems Act, 2007; Income Tax Act, 1961; Companies  Act,  2013;  Copyright  Act,  1957  etc.  FDI  policy  and  Foreign Exchange Management Act, 1999 contain provisions related to Foreign Direct Investment (FDI) in e-Commerce Sector.

The Competition Act, 2002 mandates the Competition Commission of India to prevent  practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India. The CCI looks  into  the  matter  relating  to  anti-competitive  agreements  and  abuse  of dominance by enterprises in all the sectors of the economy.

In  addition  to  the  already  existing  comprehensive  legislative  framework mentioned above, the Department for Promotion of Industry and Internal Trade (DPIIT) has also pioneered the initiative of Open Network for Digital Commerce (ONDC).  The  initiative  aims  at  promoting  open  networks  for  all  aspects  of exchange of goods and services  over  digital  or  electronic  networks.  ONDC protocols  standardize  operations  like  cataloguing,  inventory  management, order  management  and  order  fulfilment.  Thus,  small  and  medium  sized businesses  can  use  any  ONDC  compatible  applications  instead  of  being governed by specific platform centric policies. This provides multiple options to them  to  be discoverable  over  network  and  conduct  business. It also encourages easy adoption of digital means by those currently not on digital commerce networks.

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