Lest there’s some confusion about this, we thought we should make it clear that despite the Finance Minister of India mentioning e-commerce platforms in his speech, FDI in e-commerce has NOT been allowed yet. It’s just that the way he said it, made it appear as if it has. From the budget speech:

“FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell its products through retail including E-commerce platforms without any additional approval.”

So that just means that manufacturing units can sell through e-commerce platforms like Snapdeal, Ebay, Infibeam, Flipkart, and Amazon.com and Junglee.com in their current avatar in India, which they could do earlier as well. Note that e-commerce platforms (i.e. marketplaces) do not need approval for raising FDI anyway.

This puts paid to much speculation around FDI in e-commerce being allowed during the budget. Of course, the DIPP is keen on opening E-commerce to FDI, as was made abundantly clear in the meeting with industry stakeholders, but they were also clear that they needed to understand how FDI would help boost manufacturing. MediaNama had also attended that meeting, on the basis of its own independent submission to the DIPP.

To understand what is allowed, and what isn’t, in terms of structuring of FDI in e-commerce in India, download a report we had prepared with CA firm Arkay & Arkay, here.