Lok Sabha Question No. 3554 (UNSTARRED), answered on 2024-12-17
Subject: Competition from e-Commerce to Retailers
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri  Selvaganapathi T.M.

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

## LOK SABHA

UNSTARRED QUESTION NO. 3554.

TO BE ANSWERED ON TUESDAY, THE 17 TH  DECEMBER, 2024.

## COMPETITION FROM E-COMMERCE TO RETAILERS

## 3554.  SHRI SELVAGANAPATHI T.M.:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य एवं उद्योग मंत्री

- (a) whether it is a fact that the Government has decided to protect the interests of over 100 million small retailers in the country who are facing competition from major e-commerce players, etc.;
- (b) if so the details thereof;
- (c) whether it is also a fact that the business models of the e-commerce companies have been affecting the small retailers; and
- (d) if so, the details thereof and the steps taken by the Government to rectify the business models being followed by e-commerce companies?

## 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): Government  has  been  focusing  on  the  protection  of  the  interest  of  small retailers. Various measures in the form of Acts, Rules and Policies have been put in place to ensure a level playing field and act against practicing of anticompetitive conduct by e-commerce players.

With a view to encourage small retailers, Government has taken various steps which are as follows:

- i.  No  GST  registration  is  required  for  inter-state  and  intra-state  supply  of services upto Rs.20 lakhs in a year (Rs. 10 lakhs for the states of Manipur, Mizoram, Nagaland and Tripura).
- ii.  No GST registration is required for intra-state supply of goods upto Rs. 40 lakh in a year (Rs. 20 lakh in the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand).
- iii.  Composition scheme has been formulated for small businessmen being supplier of goods and supplier of restaurant services. Under the scheme, person with turnover up to Rs. 1.5 crore (Rs. 75 lakhs in States of Arunachal

Pradesh,  Manipur,  Meghalaya,  Mizoram,  Nagaland,  Sikkim,  Tripura  and Uttarakhand) needs to pay GST equal to 1% (in case of supplier of goods) or 5% (in case of supplier of restaurant services) on his turnover and needs to file his returns annually with quarterly payment of GST. Such taxpayers do not have to maintain elaborate accounts and records and instead of monthly statements and returns, they are required to file quarterly challan and only one return on annual basis.

- iv.  Composition  scheme  has  also  been  formulated  for  supplier  of  services. Under the scheme, person with turnover up to Rs. 50 lakhs needs to pay GST equal to 6% on his turnover and needs to file his returns annually with quarterly payment of GST.
- v.  A scheme of quarterly return filing and monthly payment (QRMP) has been introduced where small taxpayers with turnover up to Rs. 5 crores have an option to file returns on quarterly basis, instead of monthly return. This has considerably reduced compliance under GST  for such taxpayers. Taxpayers  may  choose  to  upload  selected  B2B  (Business  to  Business) invoices in first two months of a quarter through Invoice Filing Facility  (IFF) that enables the recipient to avail credit on such supplies. No late fee is applicable for delay in payment of GST in the first two months of the quarter for such QRMP taxpayers.
- vi.  Filing  of  NIL  GST  monthly  return  in  FORM  GSTR-3B  through  SMS  has been enabled. Similar facility has been enabled for FORM GSTR-1 and FORM GST CMP-08.
- vii.  To reduce compliance burden on small GST payers, exemption has been provided from filing annual return in FORM GSTR-9/9A for FY 2023-24 to taxpayers having Annual Aggregate Turnover upto Rs. 2 crores.
- viii.  To  facilitate  small  GST  payers  in  making  supply  of  goods  through  ecommerce operators (ECOs), and to provide parity in intra-state offline and online supply of goods, the requirement of mandatory registration for intrastate supply of goods through ECOs has been conditionally waived off with effect from 01.10.2023. Composition taxpayers have been allowed to make intra-State supply through ECOs subject to certain conditions with effect from 01.10.2023. This has opened the huge e-commerce market for the small taxpayers to sell their goods without getting mandatory registration which will boost small businesses.
- ix.  Imposition of  unfair  or  discriminatory  prices  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 inter alia predatory pricing, on a reference by the aggrieved party.
- x.  Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  has 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 makes eCommerce more inclusive  wherein  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 the small retailers and distributors, who may be currently not on digital commerce networks.

- (c) & (d): The business of the e-commerce companies are required to be operated in compliance with the laws of the country. The e-Commerce sector is governed by a comprehensive legislative framework such as Consumer Protection Act, 2019;  Consumer  Protection  (E-  commerce)  Rules,  2020;  Competition,  Act, 2002;  Central  Goods  and  Services  Act  (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 (FEMA), 1999 contain provisions related to Foreign Direct Investment (FDI) in e-Commerce Sector.

DPIIT Press Note 3 of 2016 contains Guidelines for FDI on e-commerce was issued on 29 March, 2016. Press Note 2(2018) was issued by DPIIT on 26 December, 2018 to provide further clarification on FDI policy in relation to ecommerce.  Clause  (ix)  of  Press  Note  2(2018)  stipulates  that  e-commerce entities providing market place will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which ecommerce  marketplace  entity  has  direct  or  indirect  equity  participation  or common control, to vendors on the platform at arm's length and in a fair and non-discriminatory  manner.  Such  services  will  include  but  not  be  limited  to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed  unfair  and discriminatory. Any violation of FDI regulations is covered by the penal provision of FEMA, 1999. RBI administers FEMA and Directorate of Enforcement (ED) is the authority for enforcement action under FEMA.

*******