FDI is permitted in Indian entities that carry out single brand retail via e-commerce. To encourage investment in E-commerce sector, FDI policy permits 100% foreign investment under the automatic route in companies engaged in e-commerce provided that such companies would engage only in business to Business (B2B) e-commerce.
Further, an entity is permitted to undertake retail trading through e-commerce under the following circumstances:
i) A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.
ii) A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.
iii) An Indian manufacturer is permitted to sell its own single brand products through e-commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers.
Recently, with the objective of bringing clarity on the FDI policy on e-commerce sector, the Government introduced Guidelines for Foreign Direct Investment (FDI) on e-commerce and clarified that 100% FDI under automatic route is permitted in marketplace model of e-commerce and FDI is not permitted in inventory based model of e-commerce.
This information was given by the Minister of Commerce & Industry in Lok Sabha on Monday (2nd of May).
