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4) The recent updates to the regulations governing FDI in e-commerce does well to close out the transgressions and violations in the existing policy wrt FDI in e-commerce. Critically Analyze. (250 words)

Topic-Effects of liberalization on the economy

4) The recent updates to the regulations governing FDI in e-commerce does well to close out the transgressions and violations in the existing policy wrt FDI in e-commerce. Critically Analyze. (250 words)

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Why this question

Online shopping has witnessed a very high growth rate in India and is bound to further increase in future. Indian government has recently issued some new rules for e-commerce and it is important to discuss those rules and their possible impact in detail

Key demand of the question

The question expects us to explain the recent regulations brought in by the government regarding FDI in e-commerce. Thereafter, we need to explain the pros and cons of the decision including the impact on such online marketplace. Finally we need to provide a fair and balanced view and discuss way forward.

Directive word

Critically analyze –

Structure of the answer

Introduction – Write a few introductory lines about the  recently released e-commerce rules. E.g the new rules stipulate  that e-commerce entities will have to maintain a level playing field, and ensure that they do not directly or indirectly influence the sale price of goods and services etc.

Body

  • Discuss the provisions of the rules in detail.
    • From February 1, 2019, e-commerce companies running marketplace platforms cannot sell products through companies, and of companies, in which they hold equity stake;
    • Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies etc.
  • Analyze whether these rules amount to micromanagement on the part of government which would adversely impact such investments into e-commerce sector which is a high growth sector in Indian economy. On the other hand, also explain that these explanation to the rules are a clarification of existing regulations governing FDI in e-commerce and will positively impact the domestic players.

Conclusion – Give a fair and balanced conclusion after analysing all aspects and discuss way forward.