The Department of Industrial Policy and Promotion (DIPP) has released press note 3 (2016 series) in order to provide clarity on the existing policy. The press note sets out guidelines for foreign direct investment (FDI) in the e-commerce sector. As per the consolidated FDI policy circular of 2015, up to 100% FDI is permitted under the automatic route for business-to-business (B2B) e-commerce. However, no FDI is permitted in business-to-consumer e-commerce (except for certain specified circumstances). The press note lays down the following guidelines and conditions:
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- 100% FDI under the automatic route is permitted in a marketplace model of e-commerce.
- FDI is not permitted in an inventory-based model of e-commerce.
- Marketplace e-commerce entities will be permitted to enter into transactions with sellers registered on their platforms on a B2B basis.
- The e-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services.
- E-commerce entities will not exercise ownership over the inventory.
- An e-commerce entity will not permit more than 25% of sales to be made through its marketplace from one seller or its group companies.
- In the marketplace model, goods and services made available for sale electronically on websites should clearly provide the seller’s name, address and other contact details. Post sales, delivery of goods shall be the seller’s responsibility.
- In the marketplace model, any warranty or guarantee of goods and services shall be the seller’s responsibility.
- E-commerce entities providing a marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.
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