FDI In E-Commerce To Open Up As Early As July!


This surely is a fantastic news – FDI in E-Commerce may open up as early as July and is expected to be announced by the Govt during upcoming 2014-15 union budget, reports Reuters.

FDI in e-commerce has been a subject of discussion for quite sometime now. Although the previous UPA regime announced opening up FDI in retail, they did it only for offline sector, while giving a complete miss to online retailing.

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If FDI in ecommerce becomes a reality, it will open up floodgates for online global retailers like Amazon and others to sell their own products through their e-commerce platforms. Because FDI is currently not allowed, most of the e-commerce platforms, including Amazon India, Flipkart, Snapdeal and most others have taken the marketplace route, where they allow 3rd party sellers to sell on their platform.

According to the report, this move has come about because the new Government has vehemently opposed FDI in $500 billion offline sector, and opening up FDI in e-commerce may help circumvent the political opposition.

There are no details on what amount of FDI will be allowed and or how it will be implemented, but sources have told Reuters that “The way government is initiating discussion, it is very clear that they are extremely serious about it,”

FDI in E-Commerce will not only open doors to foreign multinationals, but will also help local online businesses tremendously as they will be able to get much needed foreign investments in their business.

Currently, online businesses who sell their own products online cannot take foreign investments or funding. Infact, Flipkart who have till now raised over USD 750 million of VC funding is under the scanner for exactly the same reason.

Last month, Enforcement Directorate had come out stating that they had prima-facie evidence that Flipkart flouted Foreign Investment rules and has allegedly breached FEMA guidelines. They were planning send a show cause notice alleging this violation in tune of Rs. 1400 crores.

All said and done, even if there has been no official confirmation on this, the way things are going, it is clear that FDI in E-Commerce will open up sooner rather than later!

[Image Credit: ShutterStock]

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