Govt to simplify FDI guidelines for physical and ecommerce retail

After the Union government held discussions with stakeholders of ecommerce market over FDI amid opposition from the Retailers Association of India (RAI) and CAIT, it aims to issue guidelines for the country’s fastest growing e-commerce sector. According to Department of Industrial Policy and Promotion (DIPP), the government will keep the issues between e-commerce and brick-and-mortar retailers in mind before implementing guidelines on the FDI policy.

The Delhi High Court has directed the government to consider a plea by RAI, before taking a call on foreign investment in ecommerce and physical retail. As per the association, the rules of FDI must be same for both. The order has the potential to reopen the policy debate on rules pertaining to foreign investment in e-commerce companies as well as multi-brand retail. Delivering the order, Justice Rajiv Shakdher directed the government to consider RAI’s plea and revert with a decision within four months. The petition has asked for an equal footing between retailers and e-tailers in terms of FDI regulations introduced by the government.

RAI had expressed strong opposition to the government’s move to approach stakeholders of the ecommerce market to seek their views on FDI policy in e-commerce segment. The association feels that the retail industry must be classified on the basis of category of goods and services provided and not on the basis of brick and mortar stores or e-commerce. So retailers decided to not participate in the stakeholders’ consultation meeting on FDI policy on e-commerce sector called by DIPP. RAI had also earlier requested the government to create a simple FDI policy for retail without segregating retail by brands and channels.