The government on Tuesday announced that now 100% FDI in online retail of goods and services under the marketplace model will be allowed. Department of Industrial Promotion and Policy (DIPP) made it clear that FDI is not allowed in inventory based model of e-commerce. There has not been much change as already companies are working in marketplace model – the only difference is that now there is a clear rule and previously it was not. The second major announcement is now marketplaces can’t offer discounts and capping total sales originating from a group of company or one vendor at 25%.
The new guideline is good news for the retail stores because the government doesn’t allow FDI in multi-brand retail companies. Other important guidelines and definitions:
- FDI won’t be allowed for those e-commerce companies that own inventories of goods and services and sells directly to consumers using online.
- The marketplace e-companies will be allowed to provide support services to seller on their platform such as warehousing, logistics, etc.
- Now e-commerce companies have to display the seller’s number on their website.