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DIPP to prepare case for FDI in e-commerce
Posted On: 27-08-2013 07:00:00 AM

As per a report in Hindu Business Line, the National Security Adviser (NSA) Shivshankar Menon, in a communication to the Department of Industrial Policy and Promotion (DIPP), has suggested that the FDI provisions for multi-brand retail stores be extended to e-commerce as well. The NSA is preparing the agenda for Prime Minister Manmohan Singh’s scheduled meeting with US President Barack Obama on September 27 in Washington DC and wants the issue to be sorted out before the visit. The DIPP will examine the feasibility and implications of allowing FDI in e-commerce and respond accordingly to the NSA’s proposal.

The Government had allowed 51% FDI in multi-brand retail stores in September last year, but stated that foreign investments would not be allowed in e-commerce for fear that online retail would not deliver to the riders in the policy specifically in relation to selling in cities with a certain minimum population. Separately Amazon had suggested to the govt. that they could deliver to this rider by promising delivery only in cities where multi brand retailing has been permitted by the state govt.

Both Amazon and eBay have been in talks with the Indian Government trying to persuade it to open up the sector. Top officials from the two companies met Commerce and Industry Minister Anand Sharma during his US visit last month to discuss prospects.

While allowing FDI in e-commerce will intensify competition for domestic companies such as Flipkart, Jabong and Myntra, it would also allow them to attract foreign funds into their operations.

 
 
 

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