The dipp updated press note 3 that provides guidelines on the functioning of an. 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. May 03, 2018 disadvantages of allowing fdi in retail in e commerce. Fdi statistics department for promotion of industry and.
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. Although termed by the government as clarifying measures, the changes have disrupted the ecommerce sector without any stakeholder consultation. Fdi plays an important role in the economic development of a country. In a weeks time, the dipp is expected to respond, they said. Nasscom view the dipp is framing a draft policy to allow fdi in eretail, allowing businessto. As per the guidelines issued by the department of industrial policy and promotion dipp on fdi in e commerce, foreign direct investment fdi has not been allowed in inventorybased model of e. The department of industrial policy and promotion dipp has started the exercise on the matter and has prepared a draft note. Dipp paper lists pros and cons in allowing fdi in ecommerce. As per the fdi policy, 100 per cent overseas investments are allowed in e commerce marketplace retailing. Read more about ecommerce rules do not allow foreign investment in multibrand retail.
Development of the fdi policy for the ecommerce sector. Ecommerce rules do not allow fdi in inventorybased model or. An e commerce platform operating an inventorybased model does not. 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. What is the reason behind not allowing fdi in ecommerce in. 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. With fdi in ecommerce, global players will have adverse impact on this domestic industry. Government of india permits 100% fdi in online marketplaces.
In september last year, it was made the nodal department for the governments ecommerce. Foreign direct investment in e commerce sector in india can be a confusing area to venture in. With a view to clarify the already existing policy framework, after extensive stakeholder consultations, press note 3 was issued by dipp in 2016. 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. 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. Dipp issues guidelines for ecommerce firms for selling products. Us ecommerce companies such as amazon and ebay have a lot of interest in the indian market.
Foreign direct investment in ecommerce sector in india. 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. 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. Apr 05, 2020 retailers body is cautiously optimistic on implementation of fdi rules for e commerce 08 nov, 2019, 11. Aug 03, 2018 they have also sought views of the department on the walmartflipkart deal in the context of the current fdi policy. Jan 04, 2019 fdi policy on e commerce, first pronounced through press note 2 of 2000, permitted 100% fdi in b2b e commerce activities. Up to 100% fdi is allowed in data processing, software development and computer consultancy services. 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.
As per the consolidated fdi policy circular of 20151 2015 fdi policy, fdi up to 100% was. 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. Nasscom welcomes dipps guidelines to introduce 100% fdi in ecommerce under the clause of automatic route for marketplaces. Fdi policy on ecommerce, first pronounced through press note 2 of 2000, permitted 100% fdi in b2b ecommerce activities. Marketplace model used by ecommerce companies not recognised. As per the fdi policy, 100 per cent overseas investments are allowed in ecommerce marketplace retailing. Singaporebased ecommerce platform qoo10 acquires shopclues in.
In december 2018, the government of india revised fdi rules related to ecommerce. 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. Dipp issued revised notification on fdi policy on ecommerce. Government relaxes fdi norms for single brand retail, e. As per the rules 100 per cent fdi is allowed in the marketplace based model of e commerce. The fdi policy issued by dipp provides two entry routes for investment. Dipp issues guidelines for ecommerce firms for selling. Indias new fdi in ecommerce policy went into effect in february this year. While, fdi up to 100 per cent is permitted into an indian e commerce company that. Foreign direct investment in ecommerce sector in india can be a confusing area to venture in. India has a 100% fdi policy in b2b ecommerce segment but the same policy dose not apply for fdi in b2c. 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.
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. While some parties have hailed the move as a landmark development, others are sceptical and have come out. In december 2018, the government of india revised fdi rules related to e commerce. Aug 06, 2017 the policy amendments do not permit any fdi into an indian e commerce company that operates as an inventory model. Department of industrial policy and promotion ministry of. It will lead to monopolies in ecommerce, manufacturing, logistics and retail sector, it added. 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. Ecommerce rules do not allow foreign investment in multi. Dipp also stressed that the provisions are not against the interest of. 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. Disadvantages of allowing fdi in retail in ecommerce. Read this article for some smart investment advice. 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. In this article, aditya shrivastava, manager content marketing at ipleaders has some interesting insights to offer.
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. The policy is all set to be effective from february 1. Sep 29, 20 dipp to soon start talks in fdi in e commerce in retail. Retailers body is cautiously optimistic on implementation of fdi rules for ecommerce 08 nov, 2019, 11. Government on monday relaxed foreign direct investment fdi norms in a host of sectors including civil aviation, singlebrand retail, defence, ecommerce, and pharma by. Development of the fdi policy for the ecommerce sector ikigai law. The department of industrial policy and promotion dipp of the ministry of.
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. 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. The policy amendments do not permit any fdi into an indian ecommerce company that operates as an inventory model. 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. Fdi in ecommerce activities press note no 2 2018 series. Fdi in tamil nadu fdi opportunities in chennai fdi india. Dipp had issued a press note in december barring marketplaces. An ecommerce platform operating an inventorybased model does not only. As the guidelines has not defined these expressions, the restrictions on the ecommerce entities to not to directly. It will lead to monopolies in e commerce, manufacturing, logistics and retail sector, it added. What are the changes to the fdi norms covering ecommerce.
Nasscom welcomes dipps guidelines to introduce 100% fdi in e. Fdi in e commerce will boost infrastructure development, spur manufacturing but could also lead to large scale job losses, says paper. An ecommerce platform operating an inventory based model does not only violate the fdi policy on ecommerce but also circumvents the fdi. 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. Jan 06, 2016 marketplace model used by ecommerce companies not recognised under indias fdi policy. 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 clarification regarding press note 2 2018 pib. Dipp imposed a ceiling of 51 percent fdi in multibrand retailing.
They have also sought views of the department on the walmartflipkart deal in the context of the current fdi policy. 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. 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. What new fdi guidelines mean for the ecommerce ecosystem. The fdi rules for ecommerce have not allowed foreign investment in the. Us it firms to discuss fdi in ecommerce with policy.
An ecommerce platform operating an inventorybased model does not. 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 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. Ecommerce rules do not allow foreign investment in multibrand. Nasscom welcomes dipps guidelines to introduce 100% fdi. Ecommerce ecommerce does not have a standard definition, but it can be defined in a general sense. Indian e commerce market is at nascent stage of development. Some observations 2 service is referred to as b2c 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.
Marketplace model used by ecommerce companies not recognised under indias fdi policy. Shyam prasad, november 2, 2016, 0 comments with the onset of lpg, india has seen a. Foreign direct investment policy in india is regulated under the foreign exchange management act fema 2000 administered by the reserve bank of india rbi. Dipp to soon start talks in fdi in ecommerce in retail. With fdi in e commerce, global players will have adverse impact on this domestic industry. Department of industrial policy and promotion dipp, ministry of commerce and industry, government of india. Cci seeks dipp views on discount norms for ecommerce. 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. Finally, the department of industrial policy and promotion dipp released press note no. Cumulative fdi equity inflows remittancewise received during january, 2000 december, 2015 were 1,426,933. Fdi in ecommerce will boost infrastructure development, spur manufacturing but could also lead to large scale job losses, says paper. Sep 03, 2019 the first major fdi policy decision affecting ecommerce came through the sector specific guidelines for fdi contained in press note no. Foreign direct investment department for promotion of.
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. 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. After much delay, nasscom has finally submitted their recommendations to the dipp yesterday. Business and management consultancy services, market research services, technical testing and analysis services, under automatic route. Indias department of industrial policy and promotion dipp made foreign direct. Fdi in ecommerce activities press note no 2 2018 series lexology. Software and tools used by law firms to workfromhome. 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.
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. 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. New fdi guidelines for ecommerce sector in india enterslice. They have favoured permitting fdi in ecommerce in the retail sector. Dipp has prohibited fdi in ecommerce companies that own inventories of goods and services and sell directly to consumers using online platforms. To make things clear, let me say it on the outset that it is not fdi in ecommerce, but its fdi in b2c ecommerce.
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. Indian ecommerce market is at nascent stage of development. The dipp has sought public comments on the paper till january 30. As per the rules 100 per cent fdi is allowed in the marketplace based model of ecommerce. Govt defines ecommerce marketplace rules, allows 100% fdi. The dpiit, which was until recently the department of industrial policy and promotion dipp, has been made responsible. An e commerce platform operating an inventorybased model does not only. Fdi in ecommerce framework underway blog agama law.
Fdi in india with regard to ecommerce sector ipleaders. The first major fdi policy decision affecting ecommerce came through the sector specific guidelines for fdi contained in press note no. Dipp released pn 2 in 2018 to implement key changes to regulate and monitor the ecommerce sector in a better and desired way. Read more about e commerce rules do not allow foreign investment in multibrand retail. 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. The new guidelines are released to clarify the provision relating to inventory control, affiliated sellers and exclusive arrangements undertaken by the ecommerce entity. Foreign direct investment fdi department for promotion of. Department of industrial policy and promotion ministry of commerce and industry government of india consolidated fdi policy effective from may 12, 2015.
530 662 1381 1603 1414 1221 1457 224 1247 50 188 233 1072 69 273 1066 40 926 331 308 151 895 107 741 921 346 874 452 25 1294 979