In a move that can turn out to be a big boon to manufacturers, the Union Cabinet is likely to take a decision on allowing foreign and domestic companies with manufacturing units in India to sell their products through online portals directly to consumers. This is a great way for boosting the manufacturing sector.
According to a proposal of the Department of Industrial Policy and Promotion (DIPP), those companies manufacturing in India and even with FDI up to 100 per cent would be permitted to sell their products through the e-commerce platform. This is some freedom that the previous governments had probably never bestowed upon companies with a large amount of FDI. This is happening in the Modi Raj to promote the PM’s Make in India campaign.
At this point in time, there is a lot of vagueness on online sales directly from the manufacturing companies, especially when there is an FDI factor involved. The current policy is only allowing FDI in B2B and it is prohibited in B2C.
In his Budget speech, Finance Minister Arun Jaitley had said, “FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell their products through retail, including e-commerce platforms, without any additional approval“.
DIPP has also proposed a definition of manufacturing as per the Income Tax Act in order to allow online sales.
So now, if this system gets working in the country, the foreign firms, which have manufacturing units in the country would probably even increase production and prosper much as they get to sell directly through e-commerce portals.
This might also be one of the reasons that so many companies are making a beeline to start their manufacturing units in India!
In the current mode of sales, they need to tie up with domestic e-commerce portals to sell their products. This step under the ‘Make in India’ programme, will benefit the consumers in the country. This will help foreign investors by easing norms for foreign direct investment. The government has already eased FDI policies in various sectors, including defence, construction, railways and medical devices in the last few
months.
With this move, the contribution of manufacturing in GDP is likely to increase and go up to 25 per cent in the next ten years from the current 16 per cent. Also creating millions of more jobs in the country, something for which the populous has been battling hard.
It will be interesting to see how the domestic e-tailers react to this as their businesses are sure to steep down if manufacturers get online.
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It is really good news that manufacturing companies can now sell their product online, it will give them a good chance to save their money from mediators , and consumer will also get product on a decent price.