FDI may soon be allowed in e-retail services
Amiti Sen
New Delhi, Nov. 1:
The Government may widen the scope of foreign investment in
e-retailing by allowing FDI in services such as selling of financial
products and rail-ticket booking, in addition to transacting in goods.
This, according to officials, will be done only after a consensus in
arrived at among the ministries and departments concerned.
While initially the Government was only looking at opening the
e-retailing sector involving business-to-consumer online transactions
in goods, it has decided to consider expanding its ambit as Indian
consumers are now using the Internet for multiple purposes.
The Department of Industrial Policy and Promotion (DIPP), which has
just concluded consultations with stakeholders on allowing FDI in
e-commerce, is looking at a gamut of online commercial activities
where foreign investments could be permitted, a DIPP official told
Business Line.
The Government at present permits 100 per cent FDI in only
business-to-business (B2B) e-commerce transactions in goods. It
recently started work on allowing FDI in e-retailing on the insistence
of global companies such as Amazon and pressure from the US and the
European Union. The size of India's fast-expanding e-commerce market
is estimated to be Rs 50,000 crore.
"If you look around today, there are several e-commerce companies such
as Alibaba that exclusively cater to financial products. Electronic
transfer of shares has become common and e-receipts are accepted.
Railways tickets are being bought from the Government's website by
consumers directly and through travel agents," the official said,
adding that there was certainly a case to consider allowing FDI in all
these activities.
The DIPP is, therefore, considering going beyond B2C retail of goods
to other transactions, such as consumer-to-government (C2G),
business-to-government (B2G) and consumer-to-business (C2B)
transactions.
It will soon circulate a paper to all the ministries and departments
concerned, including Finance, Consumer Affairs and Micro, Small and
Medium Enterprises, before starting work on a Cabinet note for the
same.
"We want to get inputs from all the ministries and departments
concerned on what they feel about widening the scope of FDI in
e-commerce. We will prepare our Cabinet note accordingly," the
official said.
Going by recent discussions with the Prime Minister's Office (PMO),
the Government may allow up to 51 per cent FDI in e-commerce companies
that carry out multi-brand retailing. For companies that sell
single-brand products, the FDI limit could be 100 per cent. Foreign
investments will, however, be subject to domestic sourcing conditions.
--
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