Government contemplating 100 per cent FDI in market place model

The government is thinking of introducing foreign direct investment (FDI) in a market place format of e-commerce retailing. This is being thought of keeping in mind more foreign investments. So far 100 per cent FDI is only allowed in business-to-business (B2B) e-commerce and not in retail segment.

A group of senior officials from departments of Department of Industrial Policy and Promotion (DIPP), Corporate Affairs and Economic Affairs discussed the issue last week. DIPP has suggested that 100 per cent FDI should be allowed in ‘market place model e-commerce’ activities. In such a model the e-commerce company provides an online platform for buyers and sellers. In addition to discussion FDI, officials also talked about the definition of e-commerce. It may broadly cover transactions between buyer and seller through electronic mode like internet, television and mobile.

Usually an e-commerce firm carries its business through market place or inventory based model. In the latter, a company owns and keeps the goods in warehouses. Presently, international e-tailers such as Amazon and Ebay are operating online marketplaces in India while homegrown players like Flipkart and Snapdeal have foreign investments.

The ongoing tussle between online and offline retailers has prompted DIPP to chalk out guidelines for the e-commerce sector. It has already carried out stakeholders consultations with states, e-commerce companies and other departments.