The Department of Industrial Policy and Promotion (DIPP), which is at present under the Ministry of Commerce and Industry, may get the mandate to govern the e-commerce industry if Prime Minister Narendra Modi gives the go-ahead to a suggestion put forth by NITI Aayog

In a meeting with Modi recently, NITI Aayog Chief Executive Officer Amitabh Kant suggested making DIPP the nodal department for e-commerce, as the sector is recognised only in the Information Technology Act and the foreign direct investment policy, sources close to the development told BuisnessLine .

“Amitabh Kant had a meeting with the Prime Minister with some presentations, wherein he suggested that DIPP, which is in-charge of industry, FDI policy and ‘Make in India’, is best placed to be the nodal department for the e-commerce industry too,” a government official said.

The official said Kant is of the view that all policy matters relating to e-commerce may be assigned to DIPP in allocation of business rules. At present, e-commerce is not assigned to any department in allocation of business rules. He said since the e-commerce sector is going to be a major driver of the country’s growth, a coherent/conducive or evolving policy regime is required.

Potential market

“He (Kant) said that the e-commerce industry, although in a nascent stage, contributes around only 1 per cent to the total retail market, but has a lot of potential in the future and compete with global competitors in generating revenues and jobs,” the official added.

According to sources in various ministries, Kant has pushing for helping Indian e-commerce companies in a big way because if the market grows, it would help infrastructure develop through growth of warehousing and the supply chain.

The NITI Aayog chief also heads an e-commerce committee and is been meeting senior officials of various Ministries to discuss issues related with the sector. In September, he had given a detailed presentation to DIPP, too, on e-commerce.

The committee includes Secretaries of DIPP, Department of Economic Affairs and Ministry of Electronics and Information Technology (MeitY) and representatives of six States, specifically to look into issues in e-commerce, including FDI.

The government would also benefit from such policy as these would help tap the otherwise unorganised web of small traders and service providers, and also create greater transparency and tax collection.

Support to home-grown cos

And, to do that, the e-commerce market has to be supported by a nodal Ministry to help create some policies. Home-grown companies such as Flipkart, Snapdeal and JustDial are competing with foreign players such as eBay, Alibaba and Amazon, with little market caps.

For example, while Amazon, Alibaba and eBay have market caps of $329 billion, $204 billion and $27 billion, respectively, the Indian companies Flipkart, Snapdeal and JustDial have market caps of $11 billion, $6 billion and $2 billion, respectively.

As per various reports by market trackers, the Indian e-commerce sector is expected to reach around $40 billion by this year-end and touch $100 billion by 2020.

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