In December 2018, the government had announced tighter FDI
norms for e-commerce firms
through an informal notification titled ‘Press Note 2, 2018’. It asked all e-marketplaces to furnish a certificate, along with a report of the statutory auditor, to the RBI by September 30 of every year for the preceding financial year. However, since the Press Notes are broad guidelines, the decision has been formalised, an official said. Firms had resisted the move, citing that this would raise compliance costs for such companies. Companies had pointed out the absense of a clear format in which the report needs to be given.
Amazon and Flipkart, the two largest players in the space, were affected the most by the FDI
norm change. However, both have now reworked their internal structure to comply with it, industry experts said.
E-marketplaces had earlier sought an extension to the September 30 deadline for the current year, arguing that it took time to streamline their business and get it further assessed after the latest FDI
guidelines took effect in February.
Commerce department officials, however, had refused to budge. According to sources, e-commerce companies believe the government is using this exercise to take an unauthorised look into their financials, shareholding and operations.