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