NEW DELHI: The government is having second thoughts on allowing inventory-based model as proposed in the e-commerce draft policy.

A senior government official said on Wednesday the recommendation in the draft policy is in response to a demand from a section of the industry and it is not the real intention of the government. “It was to provoke discussion,” he added. The government is likely to come up with a fresh draft within a fortnight.

Among other things meant to regulate the booming Indian e-commerce sector, the draft policy released by the commerce ministry last week proposed to allow 49% FDI in inventory-led model as long as Indian goods are sold. But the proposal faced a severe backlash from small and medium businesses, who argued it might hurt domestic traders who largely deal in ‘Made in India’ goods.

The official said, “Most ecommerce sites in India mainly sell imported goods due to which local industries and products are impacted. What if some foreign investor said he or she is ready to pump in money into a marketplace that specialises in goods that are produced locally? That was the idea behind the recommendation. However, it’s not the final policy and after taking views of stakeholders into consideration, the draft will be fine-tuned further.”

Sources said some of the government ministries too have opposed 49% FDI through the inventory-led model route.

Praveen Khandelwal, secretary general of the Confederation of All India Traders (CAIT), a body representing traders across the country, said, “We have been asked by commerce minister Suresh Prabhu to prepare a white paper comprising recommendations by stakeholders. We will give it to him on Friday and he said he will look at it personally.”

Other trade bodies like All India Online Vendors Association (AIOVA), which represents around 3,500 vendors selling on e-marketplaces, said the present draft policy only simplifies exports and does not address viewpoints of sellers.

Some of the suggestions that will be included in the white paper will be one that looks to keep online and offline goods separate. “We are also rooting for a strong regulator that can take immediate action against erring parties because currently most regulators in the country are toothless,” said Khandelwal.

