100% FDI In E-Commerce: Everything You Need To Know

Ecommerce (or electric commerce) refers to the buying and selling of goods and services via electronic channels, primarily the Internet. In today’s world, E-Commerce has established itself as a viable and reliable means of conducting business.

We’re sure you’ve heard of the Government’s new law which will allow 100% foreign direct investment in marketplace E-Commerce companies. If not, then here’s the breakdown for you:

• The Government, on March 29th, declared that 100% FDI will be allowed only in all marketplace E-Commerce companies and not in inventory-based E-Commerce companies.
• This 100% FDI will also be allowed to provide services including warehousing, inventory and payments processing to merchants.
• Furthermore, E-Commerce companies would not be allowed to influence the prices of goods and services sold on their website which means no more heavy discounting to please us.
• Companies’ ‘influenced’ sales would now be under serious review with a new guideline policy emerging soon, pertaining to the rules of discounts and pricing.
• The notification also states that not more than 25% of goods sold can come from a single merchant.

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This notification of 100% FDI was long awaited by E-Commerce firms.

Local-foreign backed companies such as Flipkart and Snapdeal, and global whales such as Amazon India and Ebay, and several brick-and-mortar companies that use the marketplace model expect the notification to improve and redefine a section of the online retail industry in the country.

In effect, the 100% FDI will put a check on all those heavy discounts used by almost all the companies to attract customers to their platforms. So while 100% FDI will definitely boost the e-commerce in the country, it has also left the e-commerce companies to do some major clever brainstorming to deal with the unexpected twists in the clauses.

So will this be a boon or a curse? Only time will tell! Until then, enjoy e-shopping!