DIPP Set to Push for FDI in e-Com­merce with New Govt

The Economic Times - - Q - DILASHA SETH

The depart­ment of in­dus­trial pol­icy and pro­mo­tion (DIPP) will push for for­eign di­rect in­vest­ment (FDI) in e-com­merce with the new govern­ment as part of its strat­egy to give an im­pe­tus to man­u­fac­tur­ing. DIPP held a stake­hold­ers meet­ing on Thurs­day, a day be­fore the elec­tion re­sults, to firm up its views on the is­sue. The cur­rent FDI pol­icy does not al­low for­eign di­rect in­vest­ment in busi­ness-to­con­sumer e-com­merce. As such, 100% FDI is al­lowed in busi­nessto-busi­ness e-com­merce. The meet­ing was at­tended by 36 stake­hold­ers, in­clud­ing Ama­zon, Wal­mart, Google, Flip­kart, eBay, CII, Ficci, CAIT, Fismi, Nass­com, KPMG, among oth­ers. “It was to ex­am­ine is­sues re­lated to FDI in ecom­merce. We feel that FDI is needed in the e-com­merce seg­ment to boost man­u­fac­tur­ing in the econ­omy. FDI in e-com­merce is re­quired for cap­i­tal in­fu­sion in SMEs,” said a DIPP of­fi­cial. DIPP will hold an­other meet­ing with the stake­hold­ers in the next 10 days to for­malise its view on the mat­ter and present to the next govern­ment. This push to FDI in ecom­merce comes even as the exit poll fore­casts a BJP-led govern­ment af­ter the elec­tion. BJP has on the record said it is op­posed to FDI in multi-brand re­tail. Twelve states, mostly Con­gressled, had al­lowed for­eign re­tail­ers to open front-end stores in multi­brand re­tail. The new BJP-ruled govern­ment in Ra­jasthan has said it would re­verse the Congress govern­ment’s per­mis­sion. Con­fed­er­a­tion of All In­dia Traders, which has vo­cally op­posed FDI in re­tail and e-com­merce, ques­tioned the tim­ing of Thurs­day’s meet­ing. “Why was the meet­ing called a day be­fore the elec­tion re­sults. DIPP could have waited for the new govern­ment to take charge,” said Praveen Khan­del­wal, sec­re­tary gen­eral, CAIT. He added that they would vo­cif­er­ously op­pose an in­ven­to­ry­based FDI e-com­merce model as it will af­fect the busi­ness of small lo­cal brick and mor­tar play­ers. The depart­ment is in favour of same rid­ers for FDI in e-com­merce as FDI in multi-brand re­tail ex­cept for the one re­lated to ge­o­graph­i­cal bound­aries. In the cur­rent FDI pol­icy for multi-brand re­tail, the fi­nal de­ci­sion rests with states. In the case of e-com­merce, the pol­icy will be a na­tional one – re­tail­ers will be able to deliver goods in any

Depart­ment holds meet­ing with Ama­zon, Wal­mart, Google, Flip­kart and eBay to form pol­icy

state. “We can­not have ge­o­graph­i­cal bound­aries in e-com­merce, let us be clear on that. You do not have that any­where in the world,” said the of­fi­cial. The DIPP, in the dis­cus­sion paper floated in Jan­uary, had raised the ques­tion whether re­tail sale un­der MBRT should be re­stricted to states that have agreed to open front-end stores. The paper re­ceived over 100 com­ments. In­dus­try sur­veys sug­gest e-com­merce could con­trib­ute as much as 4% of GDP by 2020. In the Thurs­day meet­ing, none of the MNCs had an is­sue with the sourc­ing rider. Wal­mart pointed out that it al­ready sources about 95% from In­dia while Flip­kart said that it sources about 66% from In­dia. As per the FDI in sin­gle­brand re­tail pol­icy, com­pa­nies need to com­ply with a 30% do­mes­tic sourc­ing con­di­tion while in case of multi-brand re­tail, they need to source 30% from MSMEs. Sources said DIPP sec­re­tary Amitabh Kant firmly sup­ported FDI in e-com­merce. For­eign re­tail­ers like Ama­zon and eBay have been strongly lob­by­ing with the In­dian govern­ment to al­low FDI in e-com­merce.

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