In what is largely a status-quo ruling from the Indian government's Department of Industrial Policy and Promotion, FDI in B2C e-commerce has been disallowed in India, while FDI in marketplaces has been allowed to continue. A copy of the clarification and guidelines from the Indian government here. In that sense, this PTI story, which gives the impression that the government has allowed FDI in ecommerce marketplaces is inaccurate, since 100% FDI in marketplaces has always been allowed in India: how else did eBay buy Baazee.com? Marketplaces connect buyers with sellers, and several marketplaces, starting from Rediff (via NASDAQ), to Snapdeal, Paytm and Shopclues, and even the now defunct IndiaPlaza, have raised money from investors in the past. Lest we forget, Flipkart apparently switched to the marketplace model for compliance reasons in 2013, and Amazon India, as an ecommerce marketplace company owned by Amazon Inc, launched in the country in the same year. So, to be honest, I'm not quite sure what this tweet below is about, because this government recognition isn't new: Great to see the guidelines around 100% FDI in ecomm marketplaces. Glad the govt recognises and supports an industry transforming India! ?? — Kunal Bahl (@1kunalbahl) March 29, 2016 This ruling appears to be the outcome of a consultation process begun by the DIPP in January 2014. Disallowing FDI in ecommerce What this development IS, is essentially a means to disallow FDI in actual ecommerce, which allows online retailers to own inventory and hence the consumer experience from start to…
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