eBook Marketplaces

Is Amazon India a marketplace for eBooks? Does Amazon India allow buyers and sellers to transact without themselves selling anything and derive revenues largely from fees for services provided and should not be trading on their own account? With regard to eBooks, Amazon applies so many terms and conditions before an eBook is published that it applies too much control over publishing and leaves very little revenue for the others. Can Amazon India really be treated as a marketplace?

Times of India reports that the Indian government will soon issue a clear definition of what constitutes a 'marketplace' in the context of ecommerce in the country's foreign direct investment (FDI) policy, hoping to end disputes over popular online retail websites and encourage entrepreneurship in the digital space by leaving it unfettered. Central to this is the future of the model that's used by companies such as Flipkart, Amazon India and Snapdeal, all of which call themselves marketplaces that allow buyers and sellers to transact without themselves selling anything. Brick-and-mortar retailers have long complained that this is a ruse to get around the bar on overseas investment in companies selling directly to consumers.

The indications are that existing arrangements are unlikely to be affected. The finance ministry and the department of industrial policy and promotion (DIPP) have held discussions on the issue and an announcement is imminent, a government official aware of the development told ET. "Discussions have been completed on the matter," said the official, adding that a notification would suffice and a cabinet decision won't be needed. Changes in FDI policy are usually made through notifications known as press notes. The definition is likely to emphasize on revenues. Ecommerce companies calling themselves marketplaces will need to derive revenues largely from fees for services provided and should not be trading on their own account.

The official said this will bring clarity to the foreign investment framework and encourage entrepreneurship in the digital space by providing market access. India allows 100% overseas investment in business-to-business (B2B) ecommerce companies but bars it in the business-to-consumer (B2C) segment. This has led to accusations by offline retailers that billions of dollars of foreign investment in ecommerce sites such as Flipkart, Amazon India and Snapdeal are in violation of this policy. The ecommerce companies say they only run marketplaces on which others sell goods to consumers and are in compliance with the law.

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