E-commerce platforms to seek clarification from the Karnataka government on the Agricultural Produce Marketing Bill

E-commerce platforms are seeking clarification from the Karnataka government regarding the cess payment to local mandis after the State Assembly tabled the Karnataka Agricultural Produce Marketing (Regulation and Development) (Amendment) Bill. The Bill mandates that any e-commerce platform facilitating the sale of notified agricultural produce must pay a cess to Agricultural Produce Market Committees (APMCs).

The Bill brings e-commerce players like Amazon, Big Basket, and modern retail chains like DMart under the purview of APMCs, requiring them to pay a cess when trading in notified agricultural produce. Additionally, all such players will now need to acquire a license before trading these commodities.

In response, e-commerce firms plan to seek clarifications from the Karnataka government regarding cess payments to local mandis, according to industry executives.

“The interpretation of cess is that it often gets passed on to the consumer. It’s not something businesses typically absorb, and it keeps getting transferred down the chain,” said an industry executive who wished to remain anonymous.

Another executive noted that e-commerces, and quick-commerces players may need to rethink their strategies following the implementation of this Bill. “This move could impact pricing structures and operational costs, and we will be engaging with the government for further clarification,” the executive added.

According to the Bill, the Agricultural Marketing Director has been given the authority to act against violators in cases of fraud, said APMC Minister Shivanand S Patil. If a company disputes the director’s decision, it can appeal to the Karnataka Appellate Tribunal within 30 days of receiving the order.

State Agricultural Marketing Minister Shivanand Patil stated that the new Bill will introduce regulations for warehouse service providers, placing them under the supervision of the APMC Director, with an appellate authority handling disputes. He emphasised the need for stricter enforcement in e-commerce, citing Udaan’s ₹25 lakh fine for cess evasion as an example.

The Bill defines e-commerce platforms as those enabling licensed traders to sell agricultural produce directly to licensed retail traders within a designated market area. These transactions must be solely for consumer use, excluding resale or processing. Additionally, farmers will have the option to make payments electronically, ensuring more efficient transactions.

The legislation also outlines the role of warehouse service providers, who will be permitted to charge service fees only to buyers. These charges are capped at 5 per cent of the sale price for fruits, vegetables, and flowers, and 2 per cent for other notified produce. Warehouse operators will be required to ensure safe storage, provide insurance coverage against risks such as fire, theft, and natural disasters, and maintain essential facilities like fire-fighting systems, electronic weighing machines, e-trading services, and quality certification. Additionally, they must display commodity prices in markets and facilitate pledge loan arrangements for traders.