FDI Boost On The Horizon For Export-Linked E-commerce

New Delhi, Dec 6 (KNN) The government has decided to permit Foreign Direct Investment (FDI) in inventory-based e-commerce models, with a focus exclusively on export markets, reported FE.

An official source told FE that the Finance and Commerce & Industry ministries have aligned on this stance. However, they have identified some potential challenges in implementing the proposed policy and are actively seeking solutions to overcome them.

“A lot of background work is required at multiple levels to enable the functioning of the proposed new framework for the sector,” the official told FE on Tuesday.

Currently, FDI is prohibited in e-commerce when the platform operators function as sellers. However, a foreign manufacturer is allowed to sell its India-manufactured products via e-commerce retail.

Another avenue for FDI in retail e-commerce involves single-brand retail trading entities operating physical stores

“The policy (permitting FDI in e-commerce meant for exports) is in the final stages. There is an understanding that this restriction (on holding of inventory by e-tailers) should not be applicable to exports,” the official who wished to remain anonymous told FE, while declining to give a timeline on when the policy could be formalised.

The government expects exports through e-commerce would account for USD 200 billion of the USD 1 trillion worth of goods exports from India by 2030.

Granting increased export freedom to major e-commerce players such as Amazon would empower domestic producers, including farmers and small artisans, as well as product owners, to tap into global markets, reported FE.

“It does not create any competition with the local players or small retailers so it is a win-win for everyone,” the official added.

The easing of rules would require amendment in the Press Note 3 (2016 series) of the Department for Promotion of Industry and Internal Trade.

(KNN Bureau)