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 (DIPP) on FDI in e-commerce.
To bring clarity, the DIPP has also come out with the definition of ‘e-commerce’, ‘inventory-based model’ and ‘market place model’.
Market place model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
The inventory-based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to consumers directly, according to the guidelines.
According to DIPP, a market place entity will be permitted to enter into transactions with sellers registered on its platform on business-to-business basis.
As per the guidelines, an e-commerce firm, however, will not be permitted to sell more than 25 per cent of the sales affected through its market place from one vendor or their group companies.