PYQ Question

With reference to foreign-owned e-commerce firms, operating in India, which of the following statements is/are correct? 1. They can sell their own goods in

August 6, 2026 en

With reference to foreign-owned e-commerce firms, operating in India, which of the following statements is/are correct? 1. They can sell their own goods in addition to oﬀering their platforms as market-places. 2. The degree to which they can own big sellers on their platforms is limited. Select the correct answer using the code given below:

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Answer: B

Explanation

Consumer Protection (E-Commerce) Rules, 2020 define e-commerce entity (also foreign owned) as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller oﬀering his goods or services for sale on a marketplace e-commerce entity. Hence statement 1 is not correct. Marketplace based model of e-commerce means providing an IT platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller. On other hand, Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. However, FDI is not permitted in inventory based model of e-commerce. According to guidelines for FDI (Foreign Direct Investment) on E-Commerce, E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies. Hence statement 2 is correct.