Sunday, 17 February 2019

FW: BEFORE WE SINK ANY DEEPER INTO THE QUICKSANDS OF E COMMERCE

From: Hemen Parekh [mailto:hcp@recruitguru.com]
Sent: Sunday, February 17, 2019 11:09 AM
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Subject: BEFORE WE SINK ANY DEEPER INTO THE QUICKSANDS OF E COMMERCE

I have repeatedly pleaded with the Central Government to treat " E Commerce " as nothing more than the STANDARD / TRADITIONAL commerce, with the only difference being :

Some business processes ( such as DISPLAY - SELL - ORDER ACCEPTANCE - PAYMENT RECEIPT etc ) , are carried out electronically / digitally on the internet

There is no need to :

# Give it another " Name " - for purpose of distinction

# Treat it differently - for the purpose of taxation

# Regulate it differently - for purpose of Consumer Protection

E Commerce Story is unfolding

Following news appeared today :

Grey areas in the ‘new’ FDI policy changes in ecommerce need clarification

Extract :

The applicability of the ‘group companies’ concept has been turned on its head.

Earlier, the group companies obligation was applied on vendors.

Now, it is applicable to marketplace entities.

Accordingly, the inventory of a vendor will be deemed to be controlled by an ecommerce marketplace entity if more than 25% of the purchases of such a vendor are from the marketplace entity or its group companies.

This new criterion for considering vendors’ inventory as the inventory of the marketplace entity has resulted in a substantial change in the business model of marketplace entities.

First, how does a marketplace entity assess whether more than 25% of purchases of a vendor are from the marketplace entity or its group companies ?

The marketplace entity, after all, will not have access to books of accounts of thousands of its vendors.

And even if this is included as a contract condition by the market place entity with its vendors, what if the vendor changes name and purchases the same goods from the former with a different name?

Who will audit the vendors? The statutory audit seems to be only for marketplace entities, not for vendors.

First, there is now an ambiguity with regard to ownership or control of inventory.

On one hand, it prevents ecommerce entities providing a marketplace from exercising ownership or control over the inventory. On the other hand, it specifies that the present policy does not impose any restriction on the nature of products that can be sold on the marketplace.

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Of course, you cannot blame the Babus in the Commerce Ministry for envisaging all the 39.92 MILLION permutations / combinations that are likely to occur in a Universe called , E Commerce

It is still not too late for them to debate the following scenario which I envisaged in email that I sent to them , on 20 Jan 2019 :

( Weave a Wondrous World [ W3 ] )

“ How complex can these Business Structures get ?

I expect Shri Mukesh Ambani to conjure up for Reliance Retail , a complex structure comprising following elements :

· Holding Company and Subsidiary company Reliance Retail Ltd ( RRL )

· A “ Cooperative “ of 4 million Kirana Shops ( ala AMUL ) – KIRIL

· Cooperative holding “ non-transferable / non-voting “ shares in RRL

· Holding Company giving loans to Kirana Shops to buy shares of KIRIL

· Manufacturers of Consumer Goods launching “ E Com Platform “

· 4 million Kirana shops listing their inventory on this “ E Com Platform “

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Unless the Babus want to forever remain tied up in knots, they may just admit that :

“ One day ,

# everything will get sold online and delivered offline

# no one will be able to determine for certain, what “ business process “ takes place in

which country and when and what value gets added to a product / service where

# it will become impossible to decide who owns how much of which company and when

# there may be hundreds of variants of “ Marketplaces “ and “ Inventory Models “

# ( at least , to begin with ), many SERVICES will get delivered from outer space, where

no country has any jurisdiction. This phase will be followed by manufacture of GOODS

# WTO may need to be replaced by IPTO ( Inter-planetary Trade Organization ) considering

that USA has taken the lead in declaring its intentions by passing,

Who Owns Space? US Asteroid-Mining Act Is Dangerous And Potentially Illegal

Given this scenario , it is not difficult to understand why India has refused to participate

in WTO’s E Commerce Policy discussions

# People will download designs from internet and 3D PRINT products in their kitchens

# India may ( - and must ) become the BACK FACTORY of THE WORLD

# Millions of Indians may ( and must ) acquire “ skills training “ delivered from abroad ,

using VR headsets and pay for the same by providing some online service

A time will come ( sooner than some may like ) when our great grand-children may ask :

“ What is a shop ? “

Those “ some “ are saying :

Swadeshi Jagran Manch wants registration of e-commerce cos to be made mandatory

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17 Feb 2019

Rsvp : hcp@recruitGuru.com