Foreign Direct Investment (FDI) in India is the major monetary source for economic development in the country. Foreign companies invest in India to take benefits of cheaper wages and changing business environment of India.
According to sources; the government is considering permitting 100 per cent FDI in the market place format of e-commerce retailing in a hurdle to pull more foreign investments. The norms on Foreign Direct Investment in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government.
Currently e-retail giants like Amazon and Ebay are operating online marketplaces in India while home-grown players like Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models.
The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions.
The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholder’s consultations with states, e-commerce companies and other departments.
Currently, 100 percent FDI is allowed only in business-to-business (B2B) e-commerce.
Apart from being a critical driver of economic growth, foreign direct investment (FDI) is a major source of non-debt financial resource for the economic development of India. Data for FY2015 indicates that the increase in the FDI inflows was primarily driven by investments in infrastructure and services sector.
The government has taken many initiatives in recent years such as relaxing FDI norms across sectors, but with 100 percent FDI in retail sector, the Indian economy will definitely get a boost.