With an aim to attract more foreign investments, the Government has permitted 100 per cent Foreign Direct Investment (FDI) in the market place format of e-commerce retailing. FDI has not been allowed in inventory-based model of e-commerce as per the guidelines issued by the Department of Industrial Policy and Promotion on FDI in e-commerce.
The Department of Industrial Policy and Promotion (DIPP) clarification on marketplace model has been welcomed by the Internet and Mobile Association of India (IAMAI).
IAMAI has termed the move as progressive and believes that allowing 100 per cent FDI under automatic route in online marketplace model will usher in considerable investments and will immensely benefit the consumers and the small and medium industries, and will also open up avenues for employment generation.
Though the decision of Government has made IAMAI happy, it has been strongly opposed by The Rashtriya Swayamsevak Sangh (RSS). “The e-commerce websites have been indulging in malpractices by giving unreasonable discounts. This is predatory pricing. The government instead of punishing them has rewarded them with this move,” Co-convener of the Swadeshi Jagran Manch, Ashwani Mahajan was quoted by The Economic Times as saying.
As per Mahajan the Finance Minister and senior officials of the Government should have considered the benefit of small entrepreneur before making such a decision. They should have discussed with the experts and stakeholders before giving it a go ahead.
In the same wavelength, traders body CAIT has also opposed the Government. As per them, the 100 per cent FDI decision will give a back door entry to global players and will have a serious impact on the MSME (Ministry of Micro Small and Medium Enterprises).
“It is deeply regretted (decision)…It is an irony that Prime Minister Narendra Modi time and again advocating empowerment of small businesses whereas on the other hand regular steps are being taken to disarm the traders from their business activities,” Confederation of All India Traders (CAIT) was quoted by The Economic Times as saying.