On 29th March 2016, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion (DIPP) vide Press Note 3 (2016 Series) released the guidelines for Foreign Direct Investment (FDI) on E-commerce.
FDI up to 100% under automatic route (without prior approval from government) is permitted in Business to Business (B2B) e-commerce. Restrictions on FDI in Business to Consumer (B2C) will continue. No FDI is permitted in B2C E-commerce.
- A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.
- A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.
In order to provide the clarity on this, E-commerce business is categorized in two categories:
- Marketplace based model of E-commerce: Marketplace based E-commerce model means providing of an information technology (IT) platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller. 100% FDI is permitted in marketplace model of e-commerce.
- Inventory based model of E-commerce: Inventory based model of e-commerce means an e-commerce activity where the inventory of goods and services is owned by e-commerce entity and it sold to customers directly. FDI is not permitted in inventory based model of e-commerce.
With this press note there is more clarity about e-commerce business in India . Also, it seems for B2C e-commerce to be open for FDI, going to take some more time.