E-commerce FDI may be first off the block
Under current norms, the government doesn’t allow FDI in e-commerce but allows it in marketplaces where third-party sellers sell directly to shoppers through e-commerce platforms.business Updated: May 22, 2014 01:11 IST
The Narendra Modi-led government is likely to lift curbs on foreign direct investment (FDI) in retail as part of a broad policy push to soothe frayed nerves of investors and boost sentiments.
Though the BJP’s poll manifesto categorically states that the party is opposed to FDI in multi-brand retail, it may not be averse to opening up of the booming e-commerce sector to overseas investors that will enable retailers to hawk products directly to consumers through online deals.Under current norms, the government doesn’t allow FDI in e-commerce but allows it in marketplaces where third-party sellers sell directly to shoppers through e-commerce platforms.
Indian firms such as Flipkart have moved to a marketplace model to prevent flouting norms.
In February, Modi had asked traders not to feel intimated by big retail chains and said instead they should learn to compete and work with them, signalling a shift in the party’s stand that has persistently opposed the entry of global supermarkets. “The government should not look to curb online trade.
We should not worry about these things. Our children have taken IT to the world. We’ll have to embrace it,” he had said during a meeting of the Confederation of All India Traders (CAIT) in the Capital on February 27.
The BJP and CAIT have so far opposed foreign investment in multi-brand retail, arguing that it would put the livelihood of neighbourhood grocery stores and street vendors at risk.
In 2012, the Centre armed state governments with powers to allow or prohibit up to 51% FDI in multi-brand retail stores.
Amazon, which entered India in 2013, has stirred up the domestic e-commerce industry. US retail giant Walmart India is also is set for e-commerce foray.