Press Note 2/2018 ensures better implementation of the FDI policy in letter and spirit: DIPP clarifies

New Delhi, Jan 4 (KNN) Latest Press Note 2 of 2018, on FDI policy on e-commerce sector issued by Department of Industrial Policy & Promotion (DIPP) was needed to ensure that the rules are not circumvented, said DIPP release.

In a release to clarify, Press Note 2/2018, DIPP said “Through the latest Press Note (2/2018), government has only reiterated the policy provisions to ensure better implementation of the policy in letter and spirit.”

It said “As FDI is allowed only in B2B e-commerce, it was provided in Press Note 3/2016 that, an e-commerce entity providing marketplace will not, directly or indirectly, influence the sale price of goods or services, which also renders such business as an inventory based model.”

However, government continued to receive complaints that certain marketplace platforms were violating the policy by influencing the price of products and indirectly engaging in inventory based model, it added.

DIPP reiterates “An e-commerce platform operating an inventory based model does not only violate the FDI policy on e-commerce but also circumvents the FDI policy restrictions on multi-brand retail trading.”

Therefore, latest Press Note on FDI policy on e-commerce sector was needed to ensure that the rules are not circumvented, clarified DIPP.

It said “Fair, competitive and transparent business practices which are in compliance with law will better protect consumers in both short as well as medium and long term.”

The present policy does not impose any restriction on the nature of products which can be sold on the marketplace.

FDI in other sectors continue to be governed by the specific provisions pertaining to them. For instance, there is no change in the FDI policy on food product retail trading, which permits 100% FDI under approval route, including through e-commerce, in respect of food products manufactured and/or produced in India, DIPP added.

It further said that FDI is not permitted in the inventory-based model of ecommerce, which amounts to multi-brand retail. The current retail policy does not allow FDI in multi-brand retail. 

Press Note 2/2018 is applicable only to entities which operate a marketplace for e-commerce. FDI in other sectors continue to be governed by the specific provisions pertaining to them, it added.