Govt notification delay keeps etailers from uploading audit certificates

Ecommerce companies claim they are ready with the audit certificates for compliance with the Press Note 2, which bans foreign direct investment (FDI) in the inventory-led model of ecommerce businesses.

However, etailers have not uploaded the report and are waiting for a notification from the department on the format and language of the certificate.

The minister for commerce and industry Piyush Goyal had asked ecommerce companies to upload audited reports on FDI compliance by September 30. 

A subsequent meeting between the department and representatives of all major ecommerce entities like Amazon, Flipkart, Snapdeal, ShopClues and others decided the government will put out the final format. The format has not been notified yet. 

While Flipkart said it was ready with the auditor’s certificate, Amazon India and Snapdeal did not respond to queries sent by TechCirlce at the time of publishing the article. 

Emails sent to food tech platforms also did not elicit a response. Under the regulations, food tech platforms are also required to submit audited reports.

“There is no requirement for companies to display it on the website as long as we can provide a link to the certificate. Not all entities ‘own’ their website and the notification by the government is expected to cover that the report need not necessarily be uploaded on the same,” said a representative for an ecommerce major who was present at the previous meeting. 

He further added the companies will require a few days to upload the report from the day of the notification. 

In December 2018,  the department for promotion of industry and internal trade (DPIIT) had issued the Press Note 2, which barred ecommerce marketplaces and their group companies from equity participation in sellers on the platform. The regulation also bans companies from indirectly influencing their inventory prices.

The provisions of Press Note 2, which came into effect on February 1, also said that a seller on an online marketplace cannot account for more than 25% sales on the platform.  

Online marketplaces are required to send only two months’ audited reports on their operations as the Press Note 2 came into effect in February and the financial year closed on March 31.