India has made it mandatory for e-commerce companies to submit foreign direct investment (FDI) policy compliance report by a statutory auditor by September 30 every year, according to a government gazette notification issued on December 5. The move is being widely perceived as a step to ensure proper compliance of all FDI norms by these companies.
“Against Sl. No. 15.2.3, for entry (p), the following entry shall be substituted, namely-(p) e-commerce marketplace entity with FDI shall have to obtain and maintain a report of statutory auditor by 30th of September every year for the preceding financial year confirming compliance of the e-commerce guidelines,” a report quoting the gazette notification.
Section 15 of the Foreign Exchange Management Act (FEMA) deals with e-commerce companies.
Indian traders’ bodies have been raising their voice against alleged violation of FDI norms by several e-commerce companies. The Confederation of All India Traders (CAIT), which often complained about predatory pricing and discounts, has requested the government to make it mandatory for e-commerce companies to obtain a compliance certificate by March 31 to be able to raise funds. Commerce and industry Minister Piyush Goyal had earlier cautioned e-commerce companies of strict action if they do not halt predatory pricing on their platforms flouting FDI rules.