Question 6

Let's examine the statements regarding foreign-owned e-commerce firms operating in India:

1. They can sell their own goods in addition to offering their platforms as market-places: India's Foreign Direct Investment (FDI) policy for e-commerce prohibits foreign-owned e-commerce firms operating on a marketplace model from engaging in inventory-based e-commerce. This means they cannot sell their own goods (or goods of their group companies) on their platforms. They must strictly operate as a marketplace, connecting buyers and sellers. Therefore, statement 1 is incorrect.

2. The degree to which they can own big sellers on their platforms is limited: The FDI policy aims to prevent market distortion and promote a level playing field. It stipulates that an e-commerce marketplace entity will not permit more than 25% of the sales on its platform from one vendor or its group companies. Furthermore, an e-commerce entity or its group companies are not permitted to sell goods on a platform run by the same e-commerce entity. This implies that foreign-owned e-commerce firms are highly restricted from having ownership or significant control over the 'big sellers' on their platforms in a way that would circumvent the marketplace model or create preferential treatment. Effectively, their ability to 'own' big sellers on their platforms in any meaningful, controlling sense is generally disallowed to ensure fair competition. Given that the regulations essentially prevent such ownership or control, stating it is merely 'limited' might be an understatement if it implies some degree of significant ownership is allowed. From a regulatory perspective, such direct or indirect control over sellers is prevented, making the statement incorrect if it suggests any significant permissible ownership.