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Government likely to back ecommerce companies in legal tussle with footwear firms
#1
NEW DELHI: The government is likely to back ecommerce companies in the their legal tussle with the Footwear Manufacturers and Retailers Association (AIFMRA), a senior official said. The Department of Industrial Policy and Promotion (DIPP) is of the view that the online retailers haven't violated foreign direct investment (FDI) rules as alleged by the grouping of shoemakers and brick-and-mortar shoe shops.

Such a stance could have wider implications in the battle between offline and online retail, analysts said. The department, one of the respondents in the case currently underway in the Delhi High Court, is examining the matter as it prepares its position. 

The shoe retailers had alleged in their September petition that about two dozen ecommerce companies including Snapdeal, Myntra and Jabong were operating "in complete violation of consolidated Foreign Direct Investment Policy, 2015," as well as flouting Foreign Exchange Management Act (FEMA) regulations. 

India allows 100% overseas investment in business-to-business (B2C) ecommerce entities but bars FDI in the business-toconsumer (B2C), multi-brand online segment. Last month, DIPP allowed single-brand retailers to sell online provided they already have permission under that category. "These entities are evading the law by creating a complex and convoluted business structure by creating a facade of a 'marketplace' model," the shoe retailers said in their petition. 

They said the alleged violations were "actionable" under money laundering rules. The DIPP official cited above told ET that ecommerce companies are operating in the business-to-business (B2B) space where there are no FDI restrictions. Besides, all the concerns of the footwear manufacturers and retailers have been rendered groundless with the latest changes in the FDI policy, the official said.

"These companies can now automatically do ecommerce if they are manufacturing in India or have a single-brand li-cence. We have eased everything for them," the official said. DIPP was asked by the Delhi High Court for clarity on the ecommerce policy and to put in place a clear definition for the marketplace model. 

At the last hearing on November 19, Justice Rajiv Sahai Endlaw ordered the Enforcement Directorate to probe the 21 ecommerce companies named in the petition to check if they had in any way violated FDI rules. Over the past several months, India's brick-and-mortar retailers have stepped up their campaign against foreign-funded ecommerce companies, which they say are "circumventing" FDI laws by infusing overseas capital into retail, which India does not allow. 

Ecommerce companies such as Amazon India and homegrown rivals Flipkart and Snapdeal have maintained that they are in full compliance with India's laws as they only operate marketplaces, where vendors transact with customers. The government has held several rounds of discussions with the brick-and-mortar companies as well as online players Snapdeal, Flipkart and others. It has also received suggestions from state governments for spelling out a clear policy on ecommerce.
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#2
please tell me is there is any issue to sell footwear on online marketplace?
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#3
@parag no there is no issue in selling footwear online
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