Restaurants seek clarity on E-commerce FDI rule tweak

Restaurants in India have asked the government to clarify whether online food ordering entities such as Zomato, Swiggy, and UberEats are covered by the policy on foreign direct investment (FDI) in e-commerce.

The National Restaurant Association of India, which represents over 100,000 eateries, had asked the Department of Industrial Policy and Promotion earlier this month to state if online food companies should comply with the guidelines, which prohibit them from influencing prices and operating inventory-based models, including their own kitchens.

The norms issued by the DIPP at the end of December to provide clarity on the FDI policy are due to come into effect on February 1 and all attention so far has been on online marketplaces Flipkart and Amazon, which have been drawing buyers away from brick-and-mortar stores. They have sought more time to comply with the rules, which disallow them from owning equity in vendors, controlling the inventory sold on their platforms and influencing their prices.

Some online food companies operate as marketplaces, others are inventory-based, and some do both. The NRAI has already said that online food companies are making their consumers “discount addicts”.

“As the restaurant sector comprises lakhs of small businesses run by entrepreneurs and families, their interests need to be kept in mind. The policy should provide a fair and non-discriminatory framework,” NRAI president Rahul Singh said. “In this rush to acquire customers at any cost and intense competition between the e-commerce behemoths, we need to prevent any adversities on the brick-and-mortar players.”

“This ambiguity needs to be resolved. A calibrated view needs to be taken to balance existing business owners’ interest versus the nearly unstoppable impact of technology on customer choice, convenience, and consequent employment generation and economic value-add,” said Debashish Mukherjee, a partner at management consulting firm AT Kearney.

Source:-https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/restaurants-seek-clarity-on-e-commerce-fdi-rule-tweak/articleshow/67765791.cms 

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