India allows conditional foreign equity in e-retail

Views: 33

New Delhi, March 29 (IANS) India on Tuesday permitted conditional foreign equity in the retail e-commerce segment when the products sold are also manufactured in the country, as also for single-brand foreign entities with physical retail chains that want to go for online merchandise.

The move is expected to benefit not just foreign multi-brand retail entities like amazon and e-Bay, but also single-brand overseas chains like Adidas, Ikea and Nike. Existing Indian players like Snapdeal, Myntra, BigBasket and Flipkart can also now opt for foreign equity tie-ups.

The guidelines, issued under Press Note 3 of the Department of Industrial Policy and Promotion, came after numerous submissions from stakeholders that the current policy had no clarity on the issue of foreign equity in e-commerce where the sales were made directly to customers.

ALSO READ:   US dollar rises after solid jobs report

As per the current foreign direct investment policy, foreign capital of up to even 100 percent is allowed under the automatic route involving business-to-business e-commerce transactions. No such foreign equity was permitted in business-to-consumer e-commerce.

But now, a manufacturer is permitted to retail its products made in the country through foreign-owned entities, even as single brand foreign retail chains that currently have brick and mortar stores can undertake direct sale to consumers through e-commerce.

As regards the Indian manufacturer, 70 percent of the value of products has to be made in-house, sourcing no more than 30 percent from other Indian manufacturers. But no inventory-based sale is allowed — that is, such foreign retailers cannot stock products.

For such sales, the e-commerce model will include all digital and electronic platforms such as networked computers, television channels, mobile phones and extranets. The payment for such a sale will be in conformity with the guidelines of the Reserve Bank of India.

ALSO READ:   Apple may rope in rival Samsung for making 'A13' chip

The Boston Consulting Group has estimated that India’s retail market will touch $1 trillion by 2020 from $600 billion in 2015. Various other agencies have said that the e-retail component in that will reach $55 billion by 2018 from $14 billion now.

Comments: 0

Your email address will not be published. Required fields are marked with *