The Indian Political attitude towards Foreign Direct Investment (FDI) in multi-brand e-commerce appears to have suddenly become highly supportive and positive. It is being observed that the Prime Minister’s Office (PMO) is keen to allow foreign direct investment (FDI) in multi-brand e-commerce, to bring it at par with foreign investment norms in offline retail.
Shivshankar Menon, a National Security Adviser, in an official communication to the Industry Department, has suggested FDI be allowed in e-commerce. He reasoned that the FDI provisions for multi-brand retail stores be extended to e-commerce as well, confirmed an official from the Department of Industrial Policy and Promotion (DIPP).
Apparently, USA based companies Amazon and eBay had been trying hard to open up their routes for FDI in multi-brand e-commerce. Though there have been numerous discussion pertaining to such issue in the past, the Indian Government has categorically marginalized this sector. In an apparent bid to safeguard interests of Indian Retail and e-Commerce players, the Indian Government only allowed FDI and that too with a cap at 51% for the multi-brand retail stores. It however, specifically stated that similar or better foreign investments would not be allowed in e-commerce. It is assumed that U.S is very keen to have the doors of lucrative Indian Markets be completely opened up for Foreign Companies and hence the Indian Governmental Authorities are struggling to come up with a mutually workable solution.
What will it mean to open up FDI for domestic companies?
The change in situation will bring in large amount of funds. However, it will intensify competition too. On one hand, foreign companies are funding Indian e-Commerce players, but once the rules are relaxed they would virtually control entire operations and could force the regional players to retire. Do you think the Indian Government should ease up the present FDI Norms for multi-brand e-Commerce?
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