Commerce minister Nirmala Sitharaman has called a meeting tomorrow to discuss Foreign Direct Investment or FDI in e-commerce retailing. Domestic e-tailers like Flipkart and Snapdeal are invited as are leading industry chambers CII and FICCI.
At present, India allows 100 per cent foreign direct investment in business-to-business or B2B e-commerce, but not in retail. This means that global online retailers cannot sell products they have sourced themselves, and their Indian platforms, which they own fully, are marketplaces for outside suppliers.
Global retail giants like Amazon and also domestic players want the government to relax FDI rules in e-commerce retail too.There is also pressure from India’s free trade partners like Japan, which has proposed a relaxation in its FDI norms for e-commerce, with Japanese companies like Uniqlo pressing for it.
Last month, Ms Sitharaman told Parliament in a written reply that there is no proposal to consider a review of the FDI policy in the e-commerce sector. Government officials are said to believe that a robust online retail sector would spur manufacturing and consumption. But small retailers have opposed allowing FDI in e-commerce, alleging that it will impact their livelihood. They have held protests on this.
The Congress’s Anand Sharma today accused the government of doing a u turn, citing an FDI policy document which shows that the BJP government of Narendra Modi has retained the Congress’ policy of allowing 51% FDI in multi-brand retail.
Government sources told NDTV that there is no u-turn. The policy, they said, continues as the government decided not to revoke the UPA order. But the BJP, they said, still opposed FDI in multi-brand retail. They point out that the policy allows each state to decide whether or not to allow global supermarkets to set up shop, and BJP-ruled states will not opt for it.
India is one of the fastest-growing e-commerce markets in the Asia-Pacific along with China. The sector’s market size in the country is estimated at around $5 billion annually.
