Companies like Flipkart and Snapdeal can now be owned entirely by foreign firms, the government has decided by formally allowing 100 per cent Foreign Direct Investment or FDI for e-commerce retailers which are a “marketplace” or aggregate products from different manufacturers and sell them to customers.
The new sanction does not apply to e-commerce sites that own the products they sell.
Global giants Amazon and EBay currently own and run online marketplaces in India without local partners while home-sprung majors like Flipkart have raised billions of dollars from foreign investors.
So what the new policies offer is clarity – and considerable comfort – for e-commerce after brick-and-mortar retailers – or traditional shopkeepers- have in court accused online retailers of violating foreign investment rules.
Snapdeal founder Kunal Bahl was all thumbs-up for the new move.
Great to see the guidelines around 100% FDI in ecomm marketplaces. Glad the govt recognises and supports an industry transforming India!
Prime Minister Narendra Modi has pledged to make business easier and draw more foreign investment for the rapidly growing ecommerce space in India, whose surge is led by the ubiquitous mobile phone.
“Despite concerns that industry valuations may have gotten ahead of present reality, with a Morgan Stanley fund writing down its Flipkart stake by more than a quarter, the lure (of India) is a $25 billion market growing at up to 40 percent annually that’s still considered virgin territory. A historic rate of first-time smartphone usage and under-developed logistics and payments render the industry ripe for investment,” the Washington Post reported today.