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Plea against e-commerce sites ‘infructuous’ with new FDI policy, Centre tells Delhi HC

Smrithi Suresh

The Central Government today informed the Delhi High Court that as per the press note issued in March 2016, 100% foreign direct investment (FDI) was allowed in marketplace model of e-commerce.

Consequently, ASG Sanjay Jain told the Court that the issue raised by All India Footwear Manufacturers and Retailers Association had been rendered infructuous.

In the September last year, the AIFMRA had filed a petition to initiate investigations into e-commerce websites selling footwear. Justice RS Endlaw, who heard the case today, had previously issued notice in the matter.

The Association had claimed that websites were doing business through the internet as “Online Stores”, which was in “complete violation” of the FDI Policy. It had also added that these entities were ‘evading the law’ by creating a complex and convulated business structure through creating a facade of a market place model.

Today advocate Rishi Agrawala appeared for the Association and argued that while the Government’s statement on FDI policy had created a ‘level playing field’ for e-commerce websites and other retailers, but before this policy was put to place the sites were still doing business online. This  itself amounted to violation of the policy, in light of the investigation ordered by the Court.

However Justice Endlaw replied that the press note met their grievances entirely.

“Earlier your contention was that FDI was not permitted. Now they’ve clarified that it’s allowed. If you have to further challenge the policy then you have to challenge this press note.”

After Agrawala submitted that he will have to seek further instructions on amending the prayers of the petition and other clarifications on the press note, the Bench accordingly adjourned the case to be heard on May 23.

The Central Government, while allowing for 100% FDI in E-commerce, has also stipulated that none of these sites would  offer more than 25% discount from one vendor.

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