Govt discusses FDI in e-commerce with Flipkart, Snapdeal, Amazon and industry stakeholders

15th May 2015
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With the government holding discussions on FDI in e-commerce with various stakeholders, industry today said there should be a parity between online and offline retail policy, reports PTI. The government discussed various issues related with foreign direct investment in e-commerce sector with several stakeholders including Flipkart, Snapdeal, Amazon and industry associations like CII, FICCI, NASSCOM etc.


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According to PTI, at present, 100 per cent Foreign Direct Investment (FDI) is allowed only in business-to-business (B2B) e-commerce and not in retail segment.

"FICCI feels that FDI should be allowed in B2C e-commerce with a focus on sourcing from manufacturers and in a phased manner. The idea is to emphasize that there has to be a parity between online and offline retail policy with respect to FDI levels," the chamber said.

"By broadening the scope of foreign investments in e-commerce to include inventory apart from marketplace, the government would be placing the Indian industry at par with other emerging markets where both marketplace and inventory models are able to operate freely. As the policy is reviewed, it is important to focus on development and encouragement of MSME sector which is certainly the driving force behind the vision of Make in India. This should ensure domestic manufacturing gets impetus," FICCI stated.

However, CII said that e-commerce in India is at a relatively nascent stage and the market is yet to attain full maturity level. "While CII is favourably inclined towards 100 per cent FDI in B2C route, the sector should be given some time to come to a level where it can compete globally," it said.

NASSCOM President R Chandrashekhar said growth of e-commerce is essential because it would enhance efficiency and access to market for small manufacturers and people in the unorganised sectors. "Nurturing of the e-commerce players through investment, including FDI is a very important development. A view expressed by some that e-commerce could lead to greater imports. We do not hold that view at all," he said.

FICCI said that FDI in e-commerce would create new global markets for small businesses and help them scale at almost no cost besides generate employment and spur investment in supply chain management, warehousing and logistics services.

CII too said that it favours 100 per cent FDI in B2C route and the sector should be given some time to come to a level where it can compete globally. It recommended that the policy should establish a level playing field for all stakeholders in the e-commerce sector besides ensuring safeguards to Indian players such as mandatory local sourcing, privacy, safety against tax evasion, checking e-wastage. It took the line that retail business should not be classified based on channels like offline stores and online.

CAIT said that instead of allowing FDI in e-commerce, a study should be made about the advantages to the nation accrued so far from allowing 100 per cent FDI in single brand retail and 51 per cent in multi-brand retail. "A Board of Internal Trade should be constituted giving participation to domestic trade representatives to regulate and monitor the internal trade of India and to make it compatible to meet global challenges. Specific act, laws, rules must be formulated for conducting domestic e-commerce business," it added.

In a statement, NASSCOM said that the FDI policy should address diverse needs of entrepreneurs and investors. "It is imperative that entrepreneurs, who have already made significant investments and are looking ahead to a robust growth and market share, should be allowed to seek investments to support business operations. The government should work towards creating conditions that motivates e-commerce start-ups and investors, and not bog them down with regulatory conditions and unviable restrictions," it added. It also said that there should be no mandate to conclude sale of products sourced from India.

"The policy should stipulate that companies should offer 30 per cent locally sourced products, without any criteria related to sourcing from SMEs," NASSCOM added. Further it said any restrictions imposed by states will serve to deprive the sector from the inherently efficient processes and infrastructure development opportunities, contributing to employment and revenue generation opportunities.

"E-commerce has seen funding to the tune of USD 3 billion and is growing tremendously. It is also attracting global interest as is evident from SoftBank's investment of USD 10 billion in India over the next few years," NASSCOM said. It has emphasised that "100 per cent FDI should be allowed in B2C ecommerce and there should not be any conditions and stipulation on investment in back end infrastructure."

It informed the meeting that the e-commerce companies are facing numerous regulatory challenges in different states. It asked the government to publish broad guidelines that enable ease of doing business for these companies and could be adopted by the state governments. At present, the industry accounts for revenue of USD 14 billion growing at CAGR of 25 per cent since FY'2010, it added.

Image Credits : Shutterstock


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