French sports good retailer Decathlon’s proposal to sell its products to consumers online in India has been rejected by the Department of Industrial Policy and Promotion (DIPP), reports The Economic Times citing a government official. It adds that this is despite an approval from the Finance ministry.
The department has apparently told Decathlon that the FDI policy on single brand retail doesn’t allow online sales yet. Note that the Indian government currently allows 100% FDI in single brand retail although it does comes with a rider which mandates retail ventures to source 30% of its materials locally.
Decathlon which currently retails its products through 11 branded offline stores and online retailers like Snapdeal, Sports365.in and Playmore.in to consumers, had written to the DIPP last month seeking approval to sell its products online. It had sought an amendment to the approval given to the company noting that the online sales would be a marginal extension to its offline retail business and would enable them to retail products to customers in remote areas.
Decathlon had claimed that allowing this proposal would further improve local sourcing in the country, thereby benefitting Indian vendors. The company had estimated that it will be sourcing 35% of its products locally in the next few years.
Last month, commerce and industry minister Anand Sharma has mentioned in an interview that he is in favor of allowing 100% FDI in the e-commerce sector and they are currently awaiting the approval of Election Commission to relax the existing FDI guidelines in the business-to-consumer (B2C) e-commerce segment. However, with forthcoming general elections this month, it’s not clear whether these guidelines will now be actually relaxed or not.
It’s worth noting that competing party BJP’s views on E-Commerce are not clear yet. Responding to a query on the party’s stand on FDI in E-commerce Arvind Gupta, Head of the BJP’s IT Cell had told Medianama in August last year, that the political party was going to review Industry needs because “More and more businesses want to operate out of India. FDI in e-commerce is a huge issue because companies are dying here”. (More on that here).