Moneycontrol
Last Updated : Feb 22, 2019 06:56 PM IST | Source: Moneycontrol.com

New FDI e-commerce rules: DPIIT likely to summon food-tech firms like Swiggy, Zomato next week

"DPIIT has said they will call all the restaurant aggregators for a meeting. Given that they aggregate restaurants, they too are in the business of e-commerce," a source told Moneycontrol.

Priyanka Sahay @priyankasahay

Online food-tech firms such as Swiggy, Zomato and Foodpanda could likely be summoned by the Department for Promotion of Industry and Internal Trade (DPIIT) next week for a discussion related to the revised FDI guidelines on e-commerce, according to sources privy to the development.

"DPIIT has said they will call all the restaurant aggregators for a meeting. Given that they aggregate restaurants, they too are in the business of e-commerce," a source told Moneycontrol.

The development comes after members of the National Restaurant Association of India (NRAI) met Ramesh Abhishek, Secretary, DIIIT, seeking clarity on the issue.

In a presentation that was made to DPIIT, the association stated that food aggregators are engaged in practices that are harmful for the restaurant industry, specially for thousands of small family run restaurants.

Food aggregators provide marketplace access to sellers which in this case are restaurants and also provide other services such as delivery.

NRAI has claimed that as e-commerce entities these companies are often not complying with Press Note 2 which was announced by the government in December.

As per the revised FDI guidelines, e-commerce marketplaces cannot directly or indirectly influence the price of the product sold online.

Conventionally marketplaces demanded exclusive tie-ups in order to increase their volumes. However even this isn't possible now given that Press Note 2 bars marketplaces from mandating any seller to sell a product exclusively on its platform.

In its presentation, NRAI has also stated that restaurant agregators provide a suite of services to sellers including marketplace presence, order placement, delivery, payment collection etc.

However not many give restaurants the option of unbundled services.

"No service - such as delivery - should be forced by aggregators as a cost to participate in the basic marketplace, access for which must be provided in a fair and transparent manner," it said.

It has also demanded for the data of consumers to whom the food is delivered to. Conventionally food-tech firms do not share consumer data with the restaurants.

It has also pointed out the issue of discounting that happens on the food-tech platforms. It claims that small restaurants lose prominence on the marketplace platform if they do not participate in funding the discounts.

Swiggy, Zomato and Foodpanda did not respond to queries.

One of the industry stakeholders who spoke to Moneycontrol on condition of anonymity said that currently there is a lot of ambiguity related to the issue.

"We do not sell pre-packaged product which would have an expiry date. Thus we are not in the business of retailing products. So the rules (Press Note 2) do not apply to us. However if the government would clarify that it applies to us, we will comply by it regardless of anything," he said.
First Published on Feb 22, 2019 06:34 pm
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