According to the Department of Industrial Policy and Promotion (DIPP), the nodal department which sets guidelines and limits for foreign investments, the FDI in ecommerce in the marketplace format through automatic route will be permitted up to 100% only in B2B, hindustantimes.com reports.
Whereas, in the B2C, the FDI norms will be subject to certtain cases, such as when a manufacturer is selling Indian made goods through online format or in case where a single brand retail firm is selling goods online and is also selling same goods through physical stores. However, the government said that foreign direct investment (FDI) has not been allowed in inventory-based model of ecommerce.
DIPP also brought clarity by coming out with specific definitions as what will be considered as ‘ecommerce’, ‘inventory-based model’ and ‘marketplace model’, for policy management. It said, marketplace model of ecommerce means providing of an IT platform by an ecommerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
The inventory-based model of ecommerce means an ecommerce activity where inventory of goods and services is owned by ecommerce entity and is sold to consumers directly, according to the guidelines. A marketplace entity will be permitted to enter into transactions with sellers registered on its platform on business-to-business basis, DIPP said.
It said that an ecommerce firm, however, will not be permitted to sell more than 25% of the sales affected through its marketplace from one vendor or their group companies. “In order to provide clarity to the extant policy, guidelines for FDI on e-commerce sector have been formulated,” DIPP said.
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