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Conditions of FDI Policy on E-Commerce

Govt: better enforcement of policy


Govt: better enforcement of policy


In order to ensure due compliance of the FDI policy on e-Commerce, Press Note 2 (2018) has been issued by Ministry of Commerce and Industry, putting in place certain conditions.

These conditions include:

An entity having equity participation by e-commerce marketplace entity or its group companies or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

The ministry said that e-Commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

This Press Note is effective from 1 February 2019, said Minister of State of Commerce and Industry, C. R. Chaudhary, in written replies in the Lok Sabha on 4 Feb 2019.

Representations have been received to defer the implementation of Press Note 2. The FDI policy on e-Commerce, first pronounced through Press Note 2 of 2000, permitted 100% FDI in B2B e-commerce activities.

With a view to provide clarity to the extant policy and after extensive stakeholder consultations, guidelines for FDI on the e-commerce were issued vide Press Note 3 (2016). To provide further clarity to FDI policy on e-commerce, Press Note 2 (2018) was issued.

Stakeholder consultations on creating a framework for National Policy on e-Commerce with representatives from Government Ministries, Departments, Reserve Bank of India, industry bodies, e-commerce companies, telecom companies, IT companies and payment companies have been held. Issues regarding the e-commerce sector are regularly reviewed by the Government.

The e-commerce sector is expected to keep growing in future because of a number of reasons. The FDI policy on e-commerce has remained unchanged. Better enforcement of this policy will contribute significantly to growth of this sector over medium and long term.

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