FDI Policy in e-commerce : Hurdlefree or New Hurdles

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Abhishek Jain , MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
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The state of uncertainty in business for players in e-commerce is pretty comparable to hawkers selling their commodities on the pavements. Both of them exist in a perpetual state of precariousness. The recent move by Department of Industrial Policy and Promotion tries to reduce this uncertainty.

As per the previous policies, FDI was not allowed in the e-commerce in the country. But this never flinched the homegrown startups from raising millions of dollars showing astonishing Gross Merchandising Values to the VCs. All these startups projected themselves as technology enablers and software companies rather than e-tailers. In the previous policy, no distinction between a marketplace and inventory-led model was defined. But the recent guidelines by DPP has ended the vagueness and paved the way for 100% Foreign Investments in the marketplace model, however for inventory led models there is no provision for FDI.
Yet the E-commerce industry is not at all happy with the recent policies as it restricts any vendor to sell more than 25% on any platform, which major players like Flipkart and Amazon are not complying with. Moreover,  new rules have stopped the marketplace platforms in pricing the products they are selling, experts believe that Govt. has introduced this rule with the intention of creating a level field. But this rule may cause a serious dent in the sales of these p;platforms as almost all of these e-commerce provides huge discounts to boost sales.

Refrences

  1. http://economictimes.indiatimes.com/news/economy/policy/traders-demand-revisit-of-e-commerce-fdi-policy/articleshow/51687036.cms
  2. http://gadgets.ndtv.com/internet/news/cait-traders-demand-revisit-of-e-commerce-fdi-policy-821888
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