InvestorQ : Does the government plan to give 100% FDI in ecommerce in this budget?
diksha shah made post

Does the government plan to give 100% FDI in ecommerce in this budget?

Anu Biswas answered.
2 years ago

Yes, the government is planning some big changes in the FDI policy for ecommerce but it is, as always going to be a convoluted affair. I will come back to that later. Government is now seeking to tweak FDI rules in ecommerce in order to give a big bang boost to the high growth potential of the ecommerce sector in India.

This changes proposed by the government will specifically refer to those ecommerce units that already have FDI holding in them currently. As per the extant rules, 100% FDI is only permitted in marketplace e-commerce portals that are agnostic in nature. That essentially means that FDI is prohibited in any inventory-based activities in the ecommerce space.

This announcement assumes special significance because the confederation of Indian Traders or CAIT has been a strong opponent of FDI in retail. Apart from opposing this move tooth and nail, the CAIT has also already made several representations to the ED about flagrant FEMA violations by big ecommerce giants like Amazon and Wal-Mart.

FDI in retail has always been a sensitive topic because the retail sector in India is largely unorganized and is one of the biggest employment providers in India; especially self employment. Any loosening of FDI rules is likely to meet a lot of resistance. People like Amazon and Wal-Mart, which owns Flipkart, will be looking at the new rules keenly.