Tuesday, December 11, 2012

Indian E-Commerce, FDI Regulations And Cyber Due Diligence

Recently many media news have reported that the Indian government has referred the cases of Flipkart and Bharti Walmart to the Enforcement Directorate for alleged violation of foreign direct investment (FDI) regulations. There is a growing concern among Indian government to check the legality of e-commerce businesses operating by bypassing FDI regulations.

E-Commerce Laws and Regulations in India and FDI Regulations are two of the most common Regulations governing E-Commerce in India, says Praveen Dalal, managing partner of ICT law firm Perry4Law. While Indian E-Commerce players are well aware of FDI Regulations yet E-Commerce Laws of India are still not followed by and large, opines Dalal. 

Many media reports have claimed that Flipkart is under the scanner for allegedly flouting FDI rules which allow e-commerce companies with foreign investment to carry out only business-to-business (B2B) transactions but not business to consumer (B2C) transactions by creating complex structures that may not be permissible.

For a legal e-commerce business in India, the e-commerce businesses structuring in India must be done with due regard to applicable laws of India. The legal research report by Perry4Law for business structuring of e-commerce in India has given a special emphasis to techno legal compliances for that e-commerce players of India must follow.

For instance, Cyber Law Due Diligence in India and Cyber Due Diligence for Indian Companies are equally applicable to E-Commerce Players of India, suggests Dalal. There is a general Apathy among E-Commerce Players of India towards complying with these Statutory Requirements, opines Dalal.

In their own interest, the e-commerce entrepreneurs of India must take e-commerce compliances seriously as non compliance may attract civil, criminal and financial punishments.