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India's FDI policy excludes B2C ecommerce
Sep '12
Business-to-consumer (B2C) ecommerce is not included in the Government of India’s new policy to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail trading.
The notification issued by the Government makes it clear that retail trading through ecommerce will not be permissible for firms with FDI that are engaged either in single-brand or multi-brand retail activity.
It implies that a global multi-brand retailer like Tesco can invest up to 51 percent in a joint venture for setting up stores in Indian cities with a population of more than one million, but it cannot sell its products online through the same venture.
It also implies that an India-based online retailer cannot attract FDI in its B2C business, nor foreign online retail firms can do their business in India.
The move might come as a big relief for India’s ecommerce industry, but experts say, foreign ecommerce companies can have their operations in India by setting up a multi-tier corporate structure.
For example, if a joint venture, which is Indian-owned and managed, creates another subsidiary firm to sell its products online, it would be permissible under the existing rules.

Fibre2fashion News Desk - India

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