The government is considering formally permitting 100% FDI in the market place format of e-commerce retailing. Last week, a group of senior officials from departments of DIPP, Corporate Affairs and Economic Affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “market place model e-commerce” activities.
An e-commerce firm does business either through a market place model or an inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses. In the market place model, the e-commerce company provides an online platform for buyers and sellers.
At present, global e-tailer giants like Amazon and Ebay are operating online marketplaces in India while homegrown players like Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models. The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions.
The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers.
The department has already carried out stakeholder consultations with states, e-commerce companies and other departments.
At present, 100 per cent FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment.