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DIPP : The Marketplace Centric E-commerce Model Isn’t Recognised Under FDI Policy

In a new development, Department of Industrial Policy and Promotion’s statement (DIPP) has raised questions on the marketplace models of e-commerce players.

The Department has clearly stated that such models are not recognized under the county’s foreign direct investment (FDI) policy. The regulatory body said that the financial authorities should keep a check if any rules have been violated.

DIPP which is responsible for framing FDI policy, clearly told the high court that the regulations do not permit 100% FDI in B2C ventures but only in B2C ventures. Any violation of FDI rules, are dealt by penal provisions of Foreign Exchange Management Act (FEMA).

In the past, e-commerce models have been much criticized by the traditional retailers although the e-commerce players always said that they operate within the law.

The court has ordered the Enforcement Directorate to investigate whether ecommerce companies, including Snapdeal, Jabong, Myntra and Amazon-owned Junglee, have violated any FDI rules.

[source]

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