200 e-commerce companies suspected fake, under DIPP scanner

03 Sep 2016 | By Akriti Asthana
Eliminating fraud e-commerce companies from India's marketspace

Around 200 e-commerce companies have come under the scanner of the Department of Industrial Policy and Promotion (DIPP), many of whom are suspected to be fake.

On Thursday, Commerce and Industry Minister Nirmala Sitharaman said that the department will co-ordinate with state governments and the Consumer Affairs ministry to resolve the issue.

The matter was referred to DIPP by the Ministry of Consumer Affairs.

In context: Eliminating fraud e-commerce companies from India's marketspace

Department of Industrial Policy and Promotion

DIPP, established in 1995, is a part of Ministry of Commerce and Industry. It is responsible for formulation and implementation of measures for industrial sector growth, intellectual property rights and the initiative relating to their promotion and protection, facilitating FDI flow, and overall industrial policy.

03 Sep 2016200 e-commerce companies suspected fake, under DIPP scanner

Love Business news?
Stay updated with the latest happenings.
Proposed Solution

DetailsProposed Solution

Sitharaman had asked the consumer affairs ministry to assign two officials to run a grievance-redressal mechanism for e-commerce related queries.

It was decided at a recent meeting between officials of Consumer Affairs Ministry, DIPP and NITI Aayog that consumer complaints related to e-commerce companies would be addressed within 2 days through Twitter.

The names of the companies against whom complaints were received weren't revealed.

DeliberationAddressing grievances

The commerce ministry examined grievances of offline retailers and their associations against e-commerce companies.

Inquiries were made into the model followed by the e-commerce companies as it was suspected that they were operating in an inventory and not the marketplace model.

Brick-and-mortar retailers complained that e-commerce companies offer discounts to consumers and circumvent FDI norms by infusing overseas capital into retailing directly to customers.

Market place model in e-commerce

Marketplace model provides an information technology platform to e-commerce entities on a digital and electronic network, to act as a facilitator between buyer and seller. It allows customers to interact with selected sellers. E-commerce sector has allowed 100% FDI in marketplace model under automatic route.

InformationE-commerce committee to meet on September 5

An e-commerce committee headed by NITI Aayog CEO Amitabh Kant will hold its first meeting on September 5.

Last month, the government had set up the committee to resolve issues pertaining to e-commerce industry, including FDI norms.

Panel members include officials from Commerce and Industry Ministry and Electronics and IT Department, and representatives from Maharashtra,Karnataka,Assam,Punjab and Madhya Pradesh are expected to attend the meeting.