Government Permits 100 Percent FDI in E-Commerce Marketplace

The government permitted 100 per cent FDI (Foreign Direct Investment) in the online market place on 29th March 2016, Tuesday. The Government allowed the FDI through in the e-commerce retailing.

The FDI has not been permitted in inventory-based model of e-commerce as per the guidelines issued by the Department of Industrial Policy and Promotion (DIPP) on Foreign Direct Investment in e-commerce. There prominent e-commerce marketplace in India are funded by marquee foreign investors which names are Flipkart, Snapdeal, ShopClues and Paytm.

100 Percent FDI in Ecommerce market
100 Percent FDI in Ecommerce market

The Department of Industrial Policy and Promotion (DIPP) said that, “In order to provide clarity to the extant policy, guidelines for FDI on e-commerce sector have been formulated.” The government already allowed 100 percent Foreign Direct Investment in B2B (Business to Business) e-commerce.

E-commerce means buying and selling goods and services including digital products over digital and electronic network. DIPP said that, “e-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller.”

Amarjeet Singh, partner – tax, KPMG in India said that, “There is an issue of concentration risk but the restriction will create some problem for existing players.”   DIPP added, “Such an ownership over the inventory will render the business into inventory based model.”

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