Us ecommerce companies such as amazon and ebay have a lot of interest in the indian market. Read more about e commerce rules do not allow foreign investment in multibrand retail. Cci seeks dipp views on discount norms for ecommerce. Aug 06, 2017 the policy amendments do not permit any fdi into an indian e commerce company that operates as an inventory model. As per the consolidated fdi policy circular of 20151 2015 fdi policy, fdi up to 100% was. The dipp updated press note 3 that provides guidelines on the functioning of an. Fdi plays an important role in the economic development of a country. The new guidelines are released to clarify the provision relating to inventory control, affiliated sellers and exclusive arrangements undertaken by the ecommerce entity. Dipp, has been made responsible for the promotion of internal trade, including retail trade and welfare of traders and their employees, which was the mandate of the consumer affairs ministry earlier.
The indian itites industry body nasscom favours fdi in e commerce in the retail sector, but wants the government to make some amount of local sourcing mandatory, officials said. Shyam prasad, november 2, 2016, 0 comments with the onset of lpg, india has seen a. Dipp clarification regarding press note 2 2018 pib. Retailers body is cautiously optimistic on implementation of fdi rules for ecommerce 08 nov, 2019, 11. Foreign direct investment in ecommerce sector in india. In september last year, it was made the nodal department for the governments ecommerce. With a view to clarify the already existing policy framework, after extensive stakeholder consultations, press note 3 was issued by dipp in 2016. Fdi in ecommerce will boost infrastructure development, spur manufacturing but could also lead to large scale job losses, says paper. In a weeks time, the dipp is expected to respond, they said. Dipp issues guidelines for ecommerce firms for selling products.
Dipp had issued a press note in december barring marketplaces. Fdi in e commerce will boost infrastructure development, spur manufacturing but could also lead to large scale job losses, says paper. Dipp issues guidelines for ecommerce firms for selling. Shyam prasad, november 2, 2016, 0 comments with the onset of lpg, india has seen a rise in the flow of fdi into the country. Development of the fdi policy for the ecommerce sector.
As per the fdi policy, 100 per cent overseas investments are allowed in e commerce marketplace retailing. The decision by the government of india to allow 100% fdi foreign direct investment, in the b2c ecommerce sector has seen conflicting opinions emerging from various quarters. Up to 100% fdi is allowed in data processing, software development and computer consultancy services. Indias department of industrial policy and promotion dipp made foreign direct investment fdi policy changes to the ecommerce sector that came into force february 1 2019. In december 2018, the government of india revised fdi rules related to ecommerce. Jan 12, 2019 baibhav panda is a recent law graduate from kle law college, bengaluru and is presently a legal trainee at nucleus software limited on 26 december 2018 the department of industry and promotion dipp, ministry of commerce and industry issued press note 2 2018 series introducing changes to the conditions that would be applicable to the. May 03, 2018 disadvantages of allowing fdi in retail in e commerce. Department of industrial policy and promotion ministry of commerce and industry government of india consolidated fdi policy effective from may 12, 2015. New delhi, dec 27 knn the department of industrial policy and promotion dipp has issued a set of guidelines for ecommerce firms like amazon and flipkart for selling products. Jan 04, 2019 fdi policy on e commerce, first pronounced through press note 2 of 2000, permitted 100% fdi in b2b e commerce activities. Software and tools used by law firms to workfromhome. Dipp has prohibited fdi in ecommerce companies that own inventories of goods and services and sell directly to consumers using online platforms. The policy is all set to be effective from february 1. Read this article for some smart investment advice.
Indias department of industrial policy and promotion dipp made foreign direct. Jul 06, 2018 a response that could lead to a major embarrassment for the incumbent government, the department of industrial policy and promotion dipp, which formulates the foreign direct investment fdi policy of india, said it has no information about indian and foreign firms carrying out e commerce in india while replying to a right to information rti query. Singaporebased ecommerce platform qoo10 acquires shopclues in. Fdi in b2c ecommerce in india has always been prohibited by law, yet this has never proved a deterrent for ecommerce companies who have blatantly broken the fdi laws and raised billions of.
As the guidelines has not defined these expressions, the restrictions on the ecommerce entities to not to directly. While some parties have hailed the move as a landmark development, others are sceptical and have come out. The department of industrial policy and promotion dipp of the ministry of. What new fdi guidelines mean for the ecommerce ecosystem. Dipp the department has also suggested that its up to the financial watchdogs to investigate whether there has been any violation of fdi rules by online retailers. Foreign direct investment fdi in ecommerce the department of industrial policy and promotion, government of india dipp, vide press note 3 2016 series dated march 29, 2016 pn 32016 has issued guidelines for foreign direct investment fdi in ecommerce. Nasscom view the dipp is framing a draft policy to allow fdi in eretail, allowing businessto.
Finally, the department of industrial policy and promotion dipp released press note no. Jan 16, 2019 if there is one thing that has taken away the sleep of giant e tailers such as amazon and flipkart in india, it has to be recently announced changes in foreign direct investment fdi policy for e commerce. The department of industrial policy and promotion dipp has started the exercise on the matter and has prepared a draft note. Dipp to soon start talks in fdi in ecommerce in retail. An ecommerce platform operating an inventorybased model does not. Baibhav panda is a recent law graduate from kle law college, bengaluru and is presently a legal trainee at nucleus software limited on 26 december 2018 the department of industry and promotion dipp, ministry of commerce and industry issued press note 2 2018 series introducing changes to the conditions that would be applicable to the ecommerce entities. An e commerce platform operating an inventorybased model does not. The dpiit, which was until recently the department of industrial policy and promotion dipp, has been made responsible. Apr 05, 2020 retailers body is cautiously optimistic on implementation of fdi rules for e commerce 08 nov, 2019, 11. As per the fdi policy, 100 per cent overseas investments are allowed in ecommerce marketplace retailing.
New fdi guidelines for ecommerce sector in india enterslice. Allowing fdi in ecommerce will provide ecommerce players with complete geographical reach which will be against the regulations of fdi in multi brand retail trade i. While, fdi up to 100 per cent is permitted into an indian e commerce company that. Dipp paper lists pros and cons in allowing fdi in ecommerce. Nasscom welcomes dipps guidelines to introduce 100% fdi in e. If there is one thing that has taken away the sleep of giant etailers such as amazon and flipkart in india, it has to be recently announced changes in foreign direct investment fdi policy for ecommerce. As per the guidelines issued by the department of industrial policy and promotion dipp on fdi in ecommerce, foreign direct investment fdi has not been allowed in inventorybased model of e. What are the changes to the fdi norms covering ecommerce. Fdi policy on ecommerce, first pronounced through press note 2 of 2000, permitted 100% fdi in b2b ecommerce activities. Foreign direct investment fdi in ecommerce the department of industrial policy and promotion, government of india dipp, vide press note 3 2016 series dated march 29, 2016 pn 32016 has issued guidelines for foreign direct investment. Ecommerce rules do not allow fdi in inventorybased model or. Ecommerce ecommerce does not have a standard definition, but it can be defined in a general sense. Govt defines ecommerce marketplace rules, allows 100% fdi. Fdi in india with regard to ecommerce sector ipleaders.
As per the rules 100 per cent fdi is allowed in the marketplace based model of ecommerce. Foreign direct investment in e commerce sector in india can be a confusing area to venture in. They have favoured permitting fdi in ecommerce in the retail sector. Government of india permits 100% fdi in online marketplaces. Marketplace model used by ecommerce companies not recognised under indias fdi policy. Foreign direct investment department for promotion of. In december 2018, the government of india revised fdi rules related to e commerce. Department of industrial policy and promotion dipp, ministry of commerce and industry, government of india. Government relaxes fdi norms for single brand retail, e. The fdi policy issued by dipp provides two entry routes for investment. Although termed by the government as clarifying measures, the changes have disrupted the ecommerce sector without any stakeholder consultation. After much delay, nasscom has finally submitted their recommendations to the dipp yesterday. In this article, aditya shrivastava, manager content marketing at ipleaders has some interesting insights to offer.
Indian ecommerce market is at nascent stage of development. The indian itites industry body nasscom favours fdi in ecommerce in the retail sector, but wants the government to make some amount of local sourcing mandatory, officials said. Business and management consultancy services, market research services, technical testing and analysis services, under automatic route. Software and service companies nasscom are of the view that 100% fdi should be allowed in b2c ecommerce, saying that retail businesses should not be classified based on channels.
With fdi in e commerce, global players will have adverse impact on this domestic industry. Read more about ecommerce rules do not allow foreign investment in multibrand retail. Foreign direct investment, as distinguished from portfolio investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor. Indias new fdi in ecommerce policy went into effect in february this year. Foreign direct investment fdi department for promotion of. They have also sought views of the department on the walmartflipkart deal in the context of the current fdi policy. What is the reason behind not allowing fdi in ecommerce in.
Foreign direct investment policy in india is regulated under the foreign exchange management act fema 2000 administered by the reserve bank of india rbi. Foreign direct investment in ecommerce sector in india can be a confusing area to venture in. Some observations 2 service is referred to as b2c commerce. Ecommerce rules do not allow foreign investment in multi. Fdi in ecommerce activities press note no 2 2018 series lexology. An e commerce platform operating an inventorybased model does not only. Only indian state to 4 international airports, tamil nadu is planning special purpose aviation resource cluster sezs sparks to boost investments in the sector, which is expected to create 100,000 direct and indirect employment opportunities for highly skilled resources. Fdi statistics department for promotion of industry and. In an affidavit submitted before the delhi high court on 21 december, dipp said the current fdi policy neither permits fdi in b2c e commerce nor recognizes the marketplace model in e commerce.
The fdi rules for ecommerce have not allowed foreign investment in the. This is a clear indication, that the government identifies marketplaces as an electronic intermediary, operating a technology platform to facilitate sales and transactions between independent third party sellers and buyers. In what may bring cheers to many small retailers and offline vendors who were seeking level playing field, the dipp issued new fdi policy for ecommerce that will get effective w. An ecommerce platform operating an inventorybased model does not only. Us it firms to discuss fdi in ecommerce with policy. Also, sales of any vendor through an ecommerce marketplace entity or its group companies have been limited to 25 per cent of the total sales of such vendor. An ecommerce platform operating an inventory based model does not only violate the fdi policy on ecommerce but also circumvents the fdi. Disadvantages of allowing fdi in retail in ecommerce. The fdi rules pertaining to e commerce have not allowed foreign investment in the inventorybased model or multibrand retailing, the department of industrial policy and promotion dipp clarified thursday. Fdi in tamil nadu fdi opportunities in chennai fdi india. It will lead to monopolies in e commerce, manufacturing, logistics and retail sector, it added. Ecommerce rules do not allow foreign investment in multibrand. With fdi in ecommerce, global players will have adverse impact on this domestic industry.
Allowing fdi in e commerce will provide e commerce players with complete geographical reach which will be against the regulations of fdi in multi brand retail trade i. In 2012, the dipp stated that retail trading through ecommerce platforms i. Also, sales of any vendor through an e commerce marketplace entity or its group companies have been limited to 25 per cent of the total sales of such vendor. Fdi in b2c e commerce in india has always been prohibited by law, yet this has never proved a deterrent for e commerce companies who have blatantly broken the fdi laws and raised billions of. It will lead to monopolies in ecommerce, manufacturing, logistics and retail sector, it added. Cumulative fdi equity inflows remittancewise received during january, 2000 december, 2015 were 1,426,933. Nasscom welcomes dipps guidelines to introduce 100% fdi in ecommerce under the clause of automatic route for marketplaces. Sep 03, 2019 the first major fdi policy decision affecting ecommerce came through the sector specific guidelines for fdi contained in press note no. Dipp imposed a ceiling of 51 percent fdi in multibrand retailing. Saloni shroff, associate, cyril amarchand mangaldas the indian multibrand e commerce sector has been in focus in the recent times, having witnessed exponential growth, unprecedented investments, aggressive business valuations, lateral acquisitions and stiff competition amongst domestic and global e commerce stalwarts much to the delight of the end. Dipp released pn 2 in 2018 to implement key changes to regulate and monitor the ecommerce sector in a better and desired way. Fdi in ecommerce activities press note no 2 2018 series.
Development of the fdi policy for the ecommerce sector ikigai law. As per the rules 100 per cent fdi is allowed in the marketplace based model of e commerce. The notification for allowing 51 percent in multibrand retail clearly mentions that this policy does not allow fdi in eretail sector as government was of firm opinion that the indian markets especially in smaller cities, towns and rural areas are not mature enough for competition and. Department of industrial policy and promotion ministry of. The fdi rules pertaining to ecommerce have not allowed foreign investment in the inventorybased model or multibrand retailing, the department of industrial policy and promotion dipp clarified thursday. A response that could lead to a major embarrassment for the incumbent government, the department of industrial policy and promotion dipp, which formulates the foreign direct investment fdi policy of india, said it has no information about indian and foreign firms carrying out ecommerce in india while replying to a right to information rti query. Marketplace model used by ecommerce companies not recognised. Indian e commerce market is at nascent stage of development.
Nasscom welcomes dipps guidelines to introduce 100% fdi. Sep 29, 20 dipp to soon start talks in fdi in e commerce in retail. The dipp has sought public comments on the paper till january 30. The policy amendments do not permit any fdi into an indian ecommerce company that operates as an inventory model. Saloni shroff, associate, cyril amarchand mangaldas the indian multibrand ecommerce sector has been in focus in the recent times, having witnessed exponential growth, unprecedented investments, aggressive business valuations, lateral acquisitions and stiff competition amongst domestic and global ecommerce stalwarts much to the delight of the end. Dipp also stressed that the provisions are not against the interest of. Dipp issued revised notification on fdi policy on ecommerce. In an affidavit submitted before the delhi high court on 21 december, dipp said the current fdi policy neither permits fdi in b2c ecommerce nor recognizes the marketplace model in ecommerce. India has a 100% fdi policy in b2b ecommerce segment but the same policy dose not apply for fdi in b2c. The first major fdi policy decision affecting ecommerce came through the sector specific guidelines for fdi contained in press note no. Government on monday relaxed foreign direct investment fdi norms in a host of sectors including civil aviation, singlebrand retail, defence, ecommerce, and pharma by. Fdi in ecommerce framework underway blog agama law. Jan 06, 2016 marketplace model used by ecommerce companies not recognised under indias fdi policy.
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